1 MAY 2024
Maintel Holdings
Plc
("Maintel", the "Company" or the "Group")
Final audited results for
the year ended 31 December 2023
Performance turnaround
supported by business transformation.
Maintel Holdings Plc, a leading
provider of cloud and managed communications services, announces
its audited results for the 12-month period to 31 December
2023.
Key Financials
|
Final audited results for the year
to 31 December:
|
2023
|
2022
|
Increase/
(decrease)
|
|
|
|
|
|
|
Group revenue (£'m)
|
101.3
|
91.0
|
11.3%
|
|
Gross profit (£'m)
|
31.2
|
27.9
|
11.8%
|
|
Adjusted EBITDA[1]
(£'m)
|
9.1
|
4.4
|
106.8%
|
|
Loss before tax (£'m)
|
(6.8)
|
(4.9)
|
(38.8%)
|
|
Adjusted profit before tax
[5] (£'m)
|
5.5
|
1.6
|
243.8%
|
|
|
|
|
|
|
Basic earnings / (loss) per share
(p)
|
(37.3)
|
(30.4)
|
(22.7%)
|
|
Adjusted earnings / (loss) per share
[3] (p)
|
23.6
|
(1.6)
|
-
|
|
|
|
|
|
|
Net debt[4]
(£'m)
|
(18.1)
|
(16.6)
|
(9.0%)
|
|
Contracted cloud seats
|
182,000
|
168,000
|
8.3%
|
2023 Financial Headlines
·
Group revenue was £101.3m, up
11.3% (2022: £91.0m) with recurring revenue of £75.0m (2022:
£70.1m) at 74% of total revenue (2022: 77%).
· The
significant increase in revenue year on year reflects accelerated
trading momentum in the second half, which delivered growth beyond
the successful delivery of the order book contracted in
2022.
· Adjusted
EBITDA rose by 107% to £9.1m (2022: £4.4m) flowing from strong
revenue growth compounded by the benefits delivered through the
business reorganisation executed during the first half of
2023.
· Gross profit increased to £31.2m (2022: £27.9m) with gross
margin of 30.8% consistent year on year (2022: 30.7%).
· Adjusted profit before tax[5] increased to £5.5m
(2022: £1.6m) mainly due to the growth in revenue, and the
reduction in operating expenses.
· The net debt
[4] at year-end amounted to £18.1m, (2022: £16.6m),
owing mainly to the exceptional restructuring exceptional costs and
increased debt servicing charges. The benefits of restructuring are
realised quickly and permanently.
· Adjusted earnings per share[2] at 23.6p, increased
significantly from the 1.6p adjusted loss per share in
2022.
· Basic loss per share at 37.3p (2022: basic loss per share at
30.4p), reflects exceptional costs of (£7.0m) plus increased
interest charges of £2.2m compared with £1.1m in 2022.
· Cash
conversion[3] was 97% of adjusted
EBITDA[1] (2022: 245%.
2023 Operational Highlights
· Strategic
review - was completed in Q1 2023
and led to the implementation of a plan to transform the business,
focusing on higher growth product lines, adapting the delivery and
support organisations to crystallise substantial cost savings while
creating a scalable cost base to support future growth.
·
Business transformation - was
successfully completed in the first half of 2023, resulting in
better alignment of the product and sales teams on the provision of
specialised digital communications, and the formation of the new
professional services business group. As part of the group
structure simplifications, operations in Ireland have been wound
down, and international contracts are now fully serviced from our
operations in the UK.
· New business
- secured eight lots in the NS3 public framework,
as well as winning new long term value contracts which included
Vanquis Banking Group, Kingfisher IT Services, Harrods, Atos/Unify,
Northampton General Hospital NHS Trust and the Leeds Teaching
Hospital.
Board changes
· On
11 May 2023, Clare Bates joined the Board of Directors as
Independent Director and Nick Taylor resigned from his
Non-Executive Director role on 30 May 2023.
· On
27 February 2024, Dan Davies was appointed to the Interim CEO role
(and continues his CTO and Head of Marketing roles) enabling Carol
Thompson to focus on her Executive Chair role. The search for a
permanent CEO is ongoing.
· On
18 April 2024, John Booth announced his intention to not seek for
re-election at the Company's Annual General Meeting and Carol
Thompson left as Executive Chair.
Post period end
· The Company
successfully met the temporary milestones attributed by HSBC to its
Group loan covenants in 2023. HSBC was satisfied that the recovery
phase had been successfully completed and re-instated the initial
covenants of the loan from 31 March 2024. In March 2024, the
facility was extended to 30 September 2025, from the initial term
ending on 24 March 2025.
· In line
with the disclosure made at the time of the 2022 results, the
Callmedia business was successfully wound-down in
Q12024.
· Trading to date
in 2024, in respect of revenue, EBITDA and orders, are all in line
with management expectations.
Publication of annual report/ posting and Notice of Annual
General Meeting
The Company's 2023 Annual General
Meeting will be held at 10.30am on 19 June 2024 at the offices of
Hudson Sandler, 25 Charterhouse Square, London EC1M 6AE.
The 2023 Annual Report and Notice
of AGM, together with a form of proxy, will be posted to the
Company's shareholders no later than 10 May 2024 and the 2023
Annual Report will also be available on the Company's
website, www.maintel.co.uk/investors.
Commenting on the Group's results, Dan Davies, Interim Chief
Executive Officer, said:
"2023 was a year of business
transformation and performance turnaround for Maintel, thanks to
the successful implementation of a strategic review and a new focus
on three technology segments: Unified Communications &
Collaboration, Customer Experience, and Security &
Connectivity. The Group delivered an 11.3% increase in revenue, a
significant improvement in Adjusted EBITDA, and a strong cash
conversion performance.
"We are strong as a business and
have made a confident start to 2024, with trading
at the end of quarter one being in line with
management expectations. While we continue
to navigate challenging global macro-economic and political issues,
the Board expects FY2024 to reflect a consolidation of the progress
made in 2023, as management continues to focus on the strategic
organic growth initiatives, with a focus on margin improvement and
revenue expansion opportunities."
Notes
[1] Adjusted EBITDA is EBITDA of
£2.0m (2022: £3.3m), adjusted for exceptional items (note 12) and
share based payments (note 27).
[2] Adjusted earnings/(loss) per
share is basic loss per share of 37.3p (2022: basic loss per share
of 30.4p), adjusted for amortisation of acquired intangibles,
exceptional items, interest charge on deferred consideration, share
based payments and deferred tax items related to fixed assets
acquired in prior years (note 10). The weighted average number of
shares in the period was 14.4m (2022: 14.4m).
[3] Cash conversion is calculated
as operating cash flow (being adjusted EBITDA plus working capital)
to adjusted EBITDA.
[4] Interest bearing debt
(including issue costs of debt and excluding lease liabilities)
minus cash. Current year net debt includes £20.0m RCF and £3.0m
Term loan.
[5] Adjusted profit before tax of
£5.5m (2022: £1.6m) is basic profit before tax adjusted for
amortisation of intangibles, exceptional items and share based
payments.
This announcement contains inside information for the
purposes of the retained UK version of the EU Market Abuse
Regulation (EU) 596/2014 ("UK MAR").
For further information please contact:
|
Maintel Holdings PLC
|
0344 871 1122
|
|
|
Dan Davies, Interim Chief Executive
Officer
Gab Pirona, Chief Financial
Officer
|
|
|
|
|
|
|
|
Cavendish (Nomad and Broker)
|
020 7220 0500
|
|
|
Jonny Franklin-Adams / Emily Watts/
Hamish Waller (Corporate Finance)
Sunila de Silva (Corporate
Broking)
|
|
|
|
|
|
|
|
Hudson Sandler (Financial & Corporate
PR)
Wendy Baker / Nick Moore / Eloise
Fleet
|
020 7796 4133
maintel@hudsonsandler.com
|
|
|
|
|
NOTES TO
EDITORS
Maintel Holdings Plc ("Maintel")
is a leading provider of cloud, networking and security managed
communications services to the UK public and private sectors. Its
services aim to help its clients operate at the highest level by
designing, implementing, innovating and managing their vital
digital communication solutions, with a focus across
three strategic pillars:
· Unified Communications and
Collaboration - Making customers'
people more effective, efficient, and collaborative with UC&C
technology. The core focus of this pillar
is the high growth Unified Communications as a Service (UCaaS)
market segment.
· Customer Experience
- Helping customers to acquire,
delight and retain their customers using customer experience
technology. The core focus of this pillar
is the high growth Contact Centre as a Service (CCaaS) market
segment.
· Security &
Connectivity - Securely connecting
customers' people, partners and guests to their cloud platforms,
applications, and data with secure connectivity, and protecting
their business from cyber threat. The core
focus of this pillar is the high growth Software Defined Wide Area
Networking (SD-WAN), Security Service Edge (SSE) and Cyber Managed
Service market segments.
Maintel combines technology from
its strategic, global technology vendor and carrier partners, with
its own Intellectual Property, deployed from and managed by its own
platforms, to provide seamless solutions that its customers can
consume without the need for the internal skillset needed to deploy
and manage the technology themselves.
Maintel serves the whole market,
with a particular focus on key verticals of Financial Services,
Retail, Public Healthcare, Local Government, Higher Education,
Social Housing and Utilities. Its core market constitutes organisations with between 250 and 10,000
employees in the private, public and not-for-profit sectors with
headquarters in the UK.
The Company was founded in 1991 and
it listed on London's AIM market in 2004 (AIM: MAI).
INTERIM CHIEF EXECUTIVE
OFFICER'S STATEMENT
2023 was a year of business
transformation, assisted by a more normalised trading environment
and the associated unwind of the order book, which resulted in a
turnaround of the Group's performance.
As we entered 2023, Maintel
continued to face significant challenges including overcoming the
historic global semiconductor shortage and several years of working
practice changes in the client base due to the pandemic, meaning a
new approach was required in terms of technology usage, solution
design and the new and enduring move to hybrid working. Against
this backdrop, our teams worked well together and with their
stakeholders to respond to these challenges, designing a new way of
working and delivering service which led to an enduring step change
in performance.
A comprehensive strategic review
begun in late 2022, was completed in the early part of 2023 and the
subsequent transformation plan included organisational and cost
reduction changes. These changes focused the business on higher
growth product lines, adapting the delivery and support
organisations to crystallise substantial cost savings while
creating a scalable cost base to support future growth. This plan
was successfully implemented in the first half of
2023.
Performance
At the trading update on 22
January 2024, the Company announced that, as a result of
accelerated trading momentum, our financial performance for 2023
was expected to be ahead of market expectations. Subsequently, we
are pleased to report an 11.3% increase in revenue to £101.3m
(2022: £91.0m) and significant progress in profit generation and
working capital management that resulted in a much improved
Adjusted EBITDA performance of £9.1m (2022: £4.4m).
Cash conversion in the period
continued to be strong, driven by a rigorous working capital
management process. Our overall net debt position increased to
£18.1m (2022: £16.6m), noting that this includes exceptional items
(including one-time restructuring costs). Deleveraging remains a
focus, and with restructuring costs largely behind us,
our goal is to return to
leverage and interest coverage ratios in line with
market norms.
Strategy and Operational Update
Our leaner, more focused
organisation delivered cost structure improvements which had a
one-time exceptional cost. The restructuring of the Group was
completed in the first half and payback was within the same year,
leaving the future clear for performance and yield
improvement.
Maintel has been repositioned from
a generalist in communications managed services, to a specialist
across three strategic pillars: Unified Communications &
Collaboration, Customer Experience and Security & Connectivity.
The services we provide across these three areas are vital to our
customers, as they fundamentally underpin their ability to thrive
in a dynamic hybrid working and multi-cloud world.
In order to establish an expert
position in these three technology segments, we have been focused
on deepening our consultancy and advisory capabilities, developing
our own intellectual property to complement and differentiate the
business across its three pillars of focus, and strengthening our
relationships with the strategic technology vendor partners and
carriers that form the core of the services we now focus on
delivering for our customers. Great progress has already been made
in each of these areas of specialisation, with several exciting
launches also planned for 2024. As is expanded on in the "Our
Future" section of this report, looking forward we also continue to
plan for the role that next generation technologies such as
Artificial Intelligence will play, both in terms of our own ways of
working, but also how they will enhance our product and service
offerings.
Whilst executing our Group
restructuring, we saw the continued easing of the global
semiconductor shortage which largely returned to normalised levels
by Q2 2023. This allowed our operational teams to focus on delivery
and return the order book to more usual levels by the end of the
year. This acceleration of order book delivery resulted in a
significant increase in our project-related revenues, seeing
one-time technology and professional services revenue increase by
25.6%.
The successful delivery of these
projects resulted in an additional, ongoing contribution to our
recurring revenues as they went live, unlocking the recurring
managed service, software subscription and circuit/infrastructure
rental revenues.
As a result, our overall recurring
revenues grew by 7%, including continued strong growth in cloud
revenues (+24.7%) and a return to robust growth for data
connectivity services (+11.4%), driven by our successes in the
Software Defined Wide Area Networking (SD-WAN) and cloud security
space. These growth areas were complemented by a 16.7% increase in
call traffic revenues, driven by significant contact centre calling
volumes largely from our strong financial services customer
base.
Our heritage
on-premise support base
remain stable, an area that has been in
industry-wide double-digit decline for a number of years. We
continue to expect this area of the business to diminish over
time, but are
putting effort and resources into reducing the rate of decline to
maximise the longevity of these profitable heritage
contracts.
New Business Wins
2023 also saw a strong performance
in new business wins. Maintel secured eight lots in the new Network
Services 3 (NS3 - RM6116) public sector framework (our main route
to market for the Public Sector), whilst also winning significant
new value and long-term contracts that included Vanquis Banking
Group, Kingfisher IT Services, Harrods, Atos/Unify, Northampton
General Hospital NHS Trust and The Leeds Teaching Hospital. These
were all strong wins, demonstrating the validity of the strategic
market pivot and our ability to capitalise on these areas of strong
CAGR.
The Board
Clare Bates joined the Board of
Directors as independent Non-Executive Director on 11 May 2023 and
Nick Taylor resigned from his Non-Executive Director role on 30 May
2023.
On 27 February 2024, Carol
Thompson relinquished her role as Interim CEO, remaining Executive
Chair. At the same time, I was appointed to the Interim CEO role
while continuing in my roles as CTO and leading our marketing team.
On 18 April 2024, John Booth announced his intention not to seek
re-election of the Company's Annual General Meeting and Carol
Thompson left as Executive Chair.
The search for a permanent CEO is
ongoing and the search for a new independent Chair is underway, to
lead the business over the next phase of its
development.
Our People
Our core strength is in our
people, who showed great resilience and focus throughout 2023 in
delivering this performance. Having achieved this result, the team
are positive, energised, and keen to engage with clients, both
existing and new.
The rate of technological change
in our markets is faster than ever. The rapid move to hybrid
working and the adoption of public cloud services were both
accelerated significantly by the pandemic and play exceptionally
well into our specialised offerings. In addition, the rise of
Artificial Intelligence brings with it a generational change to the
technology landscape. We continue to invest in our people to ensure
that we capitalise on the opportunities that these technology
trends will undoubtably bring.
The level of support that I've
received, since taking on the Interim CEO role in February, is more
than I could ever have asked for. Our team are highly skilled and
inspiring, and I thank them for their hard work and
dedication.
Mergers and acquisitions
Maintel has focused on evolving
its products, customer engagements and technological advantages in
key areas such as SD-WAN, Cloud Security, CCaaS & UCaaS, and
therefore no acquisitions have been pursued. While focusing
on organic growth strategies, and our market strategy in 2024, we
remain open to new opportunities, ideas and partnerships so long as
they are value accretive and do not require up-front
investment.
Current Trading and Outlook
Having concluded our
organisational and strategic transformation in 2023, positioning
the business to generate strong growth and deliver solid economic
performance in the years to come, Maintel is focus remains on margin
improvement, mitigating the impact of continued inbound price
pressure, and on opportunities in high growth segments in
2024.
Whilst the top-line performance in
2023 was supported by the unwinding of the significant order book
built up during the semiconductor supply chain crisis of 2021-22,
and the acceleration of project delivery, 2024 has seen a return to
normalised business development and growth. The Company is
expecting to close significant new business wins in the first half
of 2024, which will contribute towards the expected growth in the
second half of the year.
In the first quarter of
2024, major
projects won in 2022 and 2023 were completed, together with the
successful implementation of planned annual price
increase. As a result, the overall
performance of the business at the end of quarter one is in line
with management expectations. Strong cash management, allowing for
the effective servicing of our debt, combined with the solid
improvement in profitability, have enabled the Company to conclude,
as of 31 March 2024, the temporary recovery phase agreed with HSBC
at the beginning of 2023.
The business has made a confident
start to 2024 with encouraging growth in our sales pipeline and the
cost management measures taken in 2023 will continue to benefit the
Group in 2024. While navigating challenging
macro-economic and political conditions,
the Board expects 2024 to reflect a consolidation of the progress made in 2023 as management
continues to focus on strategic organic
growth initiatives, with a
focus on margin improvement and
revenue expansion opportunities.
Dan Davies
Interim Chief Executive Officer
BUSINESS REVIEW
Results for the year
Revenues increased by 11.3% to
£101.3m (2022: £91.0m) and adjusted EBITDA increased to £9.1m
(2022: £4.4m). Recurring revenue as a
percentage of total revenue (being all revenue excluding one-off
projects) amounted to 74% (2022: 77%). While the relative
percentage decreased due to the strength of the project revenue
(2023: £26m, compared with 2022: £21m), the absolute value of the
recurring revenue increased by 7.1% to £75m (2022: £70m). The
increase in recurring revenue was mainly driven by:
· Managed Services and
Technology division revenue
increased by 12% to £52.1m (2022:£46.5m)supported by strong project
revenue (+25.6%) following the easing of supply chain shortages and
the successful unwinding of our contracted order book.
· Network Services
division increased by 13.0% to
£45.3m. Calls and Lines increased by 3.2% to £10.6m (2022: £10.3m),
largely resulting from price. Data increased by 11.4% to £18.4m
(2022: £16.5m) mainly due to new implementations and price.
Cloud revenue grew by £3.2m
(+24.7%) due to continued growth in public and private cloud
contracts.
· Mobile
division revenue reduced by £0.6m
(-13.2%) to £3.8m (2022: £4.4m) as the business development efforts
are focused on core revenue streams.
Gross profit for the Group
increased by 12.1% to £31.2m (2022: £27.9m) with gross margin
improving to 30.9% (2022: 30.6%).
The Group delivered an adjusted
profit before tax of £5.5m (2022:
£1.6m). Adjusted
earnings per share (EPS)(a) increased to 23.6 per share
(2022: loss per share of 1.6p) based on a weighted average number
of shares in the period of 14.4m (2022: 14.4m).
On an unadjusted basis, the Group
generated a loss before tax of £6.8m (2022: loss of £4.9m) and
basic loss per share of 37.3p (2022: basic loss per share of
30.4p). This includes £7.0m of net exceptional costs (2022: net
exceptional costs of £1.0m) (refer note 12) and amortisation of
acquired intangibles of £5.1m (2022: £5.4m).
|
|
2023
£000
|
|
2022
£000
|
|
Increase /
(decrease)
|
|
|
|
|
|
|
|
|
Revenue
|
101,262
|
|
91,036
|
|
11.2%
|
|
|
|
|
|
|
|
|
Loss before taxation
|
(6,780)
|
|
(4,889)
|
|
38.6%
|
|
Add back intangibles
amortisation
|
5,111
|
|
5,437
|
|
(6.0)%
|
|
Exceptional items
|
6,979
|
|
904
|
|
672.0%
|
|
Share based
remuneration
|
189
|
|
181
|
|
4.4%
|
|
Adjusted profit before
tax
|
5,499
|
|
1,633
|
|
236.9%
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA(a)
|
9,139
|
|
4,356
|
|
109.8%
|
|
Basic loss per share
|
(37.3p)
|
|
(30.4p)
|
|
(22.7)%
|
|
Diluted
|
(37.3p)
|
|
(30.4p)
|
|
(22.7)%
|
|
|
|
|
|
|
|
|
Adjusted Earnings / (loss) per
share(b)
|
23.6p
|
|
(1.6p)
|
|
-
|
|
Diluted
|
23.5p
|
|
(1.6p)
|
|
-
|
(a) Adjusted EBITDA is EBITDA of £2.0m (2022: £3.3m) adjusted
for exceptional items and share based remuneration (note
11)
(b) Adjusted profit after tax divided by weighted average
number of shares (note 10)
Cash performance
The Group generated net cash flows
from operating activities of £5.0m (2022: £9.8m) resulting in a
cash conversion (C) of 97% for the full year (2022:
245%).
(c) calculated as operating cash flow (being adjusted EBITDA
plus working capital) to adjusted EBITDA
Review of operations
The following table shows the
performance of the three operating segments of the
Group.
|
Revenue
analysis
|
2023
|
|
2022
|
|
Increase /
|
|
|
£000
|
|
£000
|
|
(decrease)
|
|
|
|
|
|
|
|
|
Managed services related
|
25,807
|
|
25,572
|
|
0.9%
|
|
Technology(d)
|
26,290
|
|
20,937
|
|
25.6%
|
|
Managed services and technology division
|
52,097
|
|
46,509
|
|
12.0%
|
|
Network services division
|
45,317
|
|
40,093
|
|
13.0%
|
|
Mobile division
|
3,848
|
|
4,434
|
|
(13.2%)
|
|
Total Group Revenue
|
101,262
|
|
91,036
|
|
11.2%
|
|
|
|
|
|
|
|
|
Cloud and Software
Revenues
|
£50.9m
|
|
£39.7m
|
|
28.2%
|
(d) Technology includes revenues from hardware, software,
professional services and other sales
Elements of cloud services
revenues are currently accounted for in both the managed services
and technology division (under the technology revenue line) and the
network services division.
Managed services and technology
division
The Managed Services and
Technology division contains two distinct revenue lines:
· Managed
services: all support and managed
service recurring revenues for hardware and software located on
customer premises. This combines both legacy PBX and Contact Centre
systems, which are in a managed decline across the sector as
organisations migrate to more effective and efficient cloud
solutions, with areas of technology such as Local Area Networking
(LAN), WIFI and security, which are still very much current and
developing technology areas and therefore enduring sources of
revenue.
· Technology: all non-recurring
revenues from hardware, software, professional and consultancy
services and other non-recurring sales.
Services
are predominantly provided across the UK, with some customers also
having international footprints. The division also supplies and
installs project-based technology, professional and consultancy
services to our direct clients and through our partner
relationships.
|
|
2023
|
|
2022
|
|
Increase
|
|
|
£000
|
|
£000
|
|
|
|
|
|
|
|
|
|
|
Division revenue
|
52,097
|
|
46,509
|
|
12.0%
|
|
Division gross profit
|
12,285
|
|
11,399
|
|
7.8%
|
|
Gross margin (%)
|
24%
|
|
25%
|
|
|
This division increased revenue by
12.0% to £52.1m, mainly driven by strong project revenue deriving
from the delivery of projects sold in 2022 and 2023, enabled by the
availability of equipment following the easing of the availability
of semiconductor and the normalisation of the global technology
hardware supply chain. Both the technology and professional
services divisions benefitted from the improved trading conditions
and grew respectively by 29% and 18% respectively in
2023.
The slowdown in the decline of our
heritage on premise support business, combined with price actions
resulted in a 0.9% growth in the revenue of that product line to
£25.8m. The general global market decline in the legacy PBX and
contact centre markets, still benefits the Network Services
division with customers from our legacy managed service base
transitioning to Maintel's cloud-based services. The most notable
transformation contracts in 2023 being for a number of key
financial services and retail customers.
Gross profit increased in the
division at a lower rate than revenue (+7.8%), due to the revenue
mix weighted towards the Technology revenue streams. The revenue
mix also translates into the decrease in the average gross margin
of the division from 25% to 24%.
Network Services
Division
The Network Services division is
made up of three strategic revenue lines:
· Cloud -
subscription and managed service revenues from
cloud contracts.
· Data -
subscription, circuit, co-location and managed
service revenues from Wide Area Network (WAN), SD-WAN, internet
access and managed security service contracts.
· Call traffic and line rental
- recurring revenues from both
legacy voice and modern SIP Trunking contracts.
|
|
2023
|
|
2022
|
|
Increase /
|
|
|
£000
|
|
£000
|
|
(decrease)
|
|
|
|
|
|
|
|
|
Call traffic
|
3,408
|
|
2,921
|
|
16.7%
|
|
Line rental
|
7,234
|
|
7,391
|
|
(2.1%)
|
|
Data connectivity
services
|
18,415
|
|
16,537
|
|
11.4%
|
|
Cloud
|
16,000
|
|
12,827
|
|
24.7%
|
|
Other
|
260
|
|
417
|
|
(37.6%)
|
|
Total division
|
45,317
|
|
40,093
|
|
13.0%
|
|
Division gross profit
|
17,386
|
|
14,639
|
|
18.8%
|
|
Gross margin (%)
|
38%
|
|
37%
|
|
|
Network Services revenue grew by
13.0% and gross profit increased by 18.8% to £17.4m, resulted in a
1.0pts improvement in gross profit to 38%. The growth in the higher
margin cloud revenue products offsetting the decline in lower
margin call traffic revenues. Our fixed line telephony revenues
(shown above under call traffic and line rental) increased by 3.2%
to £10.6m (2022: £10.3m). Within this, our overall line rental
revenues reduced by 2.1%, reflecting the overall market decline for
legacy Public Switched Telephone Network (PSTN) products as
customers migrate to consolidated modern SIP Trunking or Cloud
Communication services. However our revenue from Call Traffic
increased by 16.7%, driven by an increase in inbound contact centre
calling traffic and outbound SIP call traffic, predominantly from
our strong Financial Services customer base.
Data connectivity revenues saw a
significant increase of 11.4%. The acceleration of revenue since
2022 is now reflecting the increasing impact that our new Software
Defined Wide Area Networking (SD-WAN) and managed Cloud Security
Services are having on the performance of this division. Much of
the business closed in these new areas had been delayed from
delivery by the semiconductor supply shortage however delivery
conditions have now normalised, and the trend is set to continue as
we continue to win new contracts.
Our momentum in the Security &
Connectivity space continued in the period with key contract wins
for several customers including a leading retailer and NHS
Trusts.
The number of contracted seats
across our cloud communication services significantly increased, up
8.6% in the year to ~182,500 seats at the end of December 2023
(~168,000 at December 2022), in line with the market growth rates
for this technology segment.
Overall, 75.4% of the overall
cloud seats contracted in 2023 were public cloud based,
highlighting the expected growing trend of a preference for public
cloud services in many industry verticals. This trend was
accelerated by some significant wins in this space, including a
>7,000 seat RingCentral Unified Communications win for
Kingfisher, a ~2000 seat RingCentral win with Angus Council, a
strategic Genesys Contact Centre win for the Vanquis Banking group,
and many other public cloud wins.
Our flagship ICON private cloud
service sales also continued to perform, with key wins such as a
~5,000 seat win for Gloucestershire Health and Care NHS Foundation
Trust. Demand for the Virtual Private Cloud service that our ICON
platform offers continues to remain high across the sectors with
complex requirements or where an absolute minimum of downtime is
required, such as Finance, Insurance, Healthcare and Housing
verticals in particular. With the platform providing very high
(99.999%) core service availability levels, including hybrid local
survivability, guaranteed UK data sovereignty, security ringfenced
customer instances, license and handset investment protection and
the ability to allow customers to manage platform evolution at
their own pace.
Our cloud communications pipeline
remains strong, with key wins expected to close in FY24. Having
long surpassed the inflection point where economies of scale are
realised, our focus has now turned to quality of earnings over
volume for our cloud communications business.
Mobile
Division
The Mobile division generates
revenue primarily from commissions received as part of its dealer
agreements with O2 which scales in line with growth in partner
revenues, in addition to value added services sold alongside mobile
such as mobile fleet management and mobile device
management.
|
|
2023
|
|
2022
|
|
Increase /
(Decrease)
|
|
|
£000
|
|
£000
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
3,848
|
|
4,434
|
|
(13.2%)
|
|
Gross profit
|
1,568
|
|
1,820
|
|
(13.8%)
|
|
Gross margin (%)
|
40.7%
|
|
41.0%
|
|
(0.3%)
|
|
|
|
|
|
|
|
|
Number of customers
|
511
|
|
535
|
|
(4.5%)
|
|
Number of connections
|
28,445
|
|
26,689
|
|
6.6%
|
Revenues decreased by 13.2% to
£3.8m (2022: £4.4m) and gross profits also declined by 13.8%,
reflecting the refocus of the Maintel's business development
towards our focus revenue streams. Although customer churn remained
low in the period, the lack of new business compounded by downward
price pressure on contract renewals drove the negative revenue
progression. Recognising these market challenges, Maintel has been
proactively resourcing the mobile sales team to focus on customer
retention as opposed to new business.
Maintel's mobile proposition
continues to be multi-faceted and network agnostic and ensuring we
can provide competitive and complete coverage for the UK. This
enables us to be in a position to cater for our customers'
requirements. Our mobile go to market proposition remains focused
on the mid-market enterprise space (100 - 2,000 connections) and
the launch of our new mobile reporting functionality within our
ICON Portal digital customer engagement platform has resonated well
with our customer base.
Other operating income
Other operating income of £0.5m
(2022: £0.5m) relates to the recovery of one year's R&D tax
credit of £0.5m (2022: £0.5m).
Other administrative expenses
|
|
2023
|
|
2022
|
|
|
|
|
£000
|
|
£000
|
|
(Decrease)
|
|
Other administrative expenses
|
24,123
|
|
25,902
|
|
(6.9%)
|
Other administrative expenses for
the Group decreased by 6.9% to £24.1 (2022: £25.9m).
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. The net
£1.8m reduction mainly reflects the savings from organisational
optimisation initiatives.
The overall average headcount in
2023 reduced by 2.2% (or 11 FTEs) and now stands at 482 (2022:
493). At 31 December 2023, the FTEs was 445 compared to 503 at 31
December 2022 as a result of the Group's programme of
re-organisation, creating an organisation 'fit for
future'.
Exceptional items
Exceptional costs of £7.0m (2022:
exceptional costs £0.9m) were substantially driven by the business
transformation project (£4.9m) as discussed in more detail
below.
· The
termination of the Callmedia business represents £2.3m non-cash
impairment charge of the previously capitalised software
development and £0.3m of development costs net of associated
revenues.
· £1.6m results from the downsizing of the London premises and
exceptional service charge.
· Staff-related restructuring costs (£1.5m) associated with the
organisational review of the business.
·
Other transformation costs in
the year of £0.7m relate to the strategic review of the business
having led to the strategic pivot re-focusing the business over
three pillars: unified communications and collaboration, customer
experience and security & connectivity.
· Other
exceptional costs include £0.4m of fees relating to our credit
facility agreement following the amended agreement that negotiated
temporary covenant terms in place during the phase of
transformation of the Company.
In 2022, exceptional costs of
£0.9m were substantially driven by staff-related restructuring
costs (£0.4m) associated with the ongoing review of the Group's
operating costs base. Other exceptional costs included £0.3m in
relation to foreign exchange impact on a specific contract, which
had been delayed since 2021 as a consequence of the logistics
issues related to the Covid pandemic; and fees relating to a
revised credit facilities agreement of £0.2m.
A full breakdown is shown in note
12.
Interest
The Group's net interest charge
was £2.2m in the year (2022: £1.1m).
Taxation
The tax credit in the period of
£1.4m is driven by a £1.4m increase in deferred tax in relation to
tax losses (£0.7m) and fixed assets (£0.8m), and a £0.3m adjustment
to prior period deferred tax for temporary taxable timing
differences on intangible assets.
The prior year tax credit of £0.5m
was driven by the net combined effect of deferred tax arising from
the current tax losses of £0.7m, fixed assets (£0.2m) offset by a
£0.3m adjustment to prior period taxation.
Dividends and earnings per
share
The Board continues to take a
prudent approach to the Company's dividend policy. Throughout 2023
the Board has been focused on de-leveraging of the Company and
investing in the future growth of the Group's operations.
Consequently, it has made the decision not to propose a final
dividend for the full year 2023 (2022: nil pence per
share). It remains the Board's intention to review returns to
shareholders when economic conditions improve and financial
performance permits.
Adjusted profit per share is
23.6p, increasing from the adjusted loss per share of 1.6p in 2022.
On an unadjusted basis, basic loss per share is at 37.3p (2022:
basic loss per share at 30.4p).
Consolidated statement of financial
position
Net assets decreased by £5.2m in
the year to £14.2m at 31 December 2023 (2022: £19.4m) with the key
movements explained below.
Trade and other receivables
decreased by £2.0m to £25.4m (2022: £27.4m), driven by a decrease
in prepayments and accrued income to £12.7m (2022: £13.7m). Within
this, accrued income decreased by £0.6m, as billing milestones were
reached during the year as equipment became available; prepayments
decreased by £0.4m, as the result of a pro-active reduction in
upfront payments to suppliers.
Trade and other payables decreased
by £3.2m to £43.9m (2022: £47.1m). Within this, trade payables
decreased by £5.9m at December 2023, following the normalisation of
working capital; deferred income increased by £1.7m driven by
recurring revenue and technology advance billings; Other payables
and accruals increased by £1.0m driven principally by the
recognition of an onerous lease contract and capital expenditure
accruals.
Intangible assets decreased by
£4.3m driven by impairment charges of £2.3m in relation to the
termination of the Callmedia business, amortisation of £5.1m,
offset by £3.1m of capital expenditure in relation to capitalised
software development and software licences.
Inventories reduced by £0.9m in
the period driven by the unwinding of the significant order book
built up through 2021 and 2022.
Borrowings of £22.9m (2022:
£22.7m) represent the Group's drawn down debt, consisting of £20.0m
Rolling Credit Facility and £3.0m Term loan, net of costs of issue
of £0.1m.
Cash flow
As at 31 December 2023 the Group
had net debt of £18.2m, excluding issue costs of debt of £0.1m, (31
December 2022: £16.8m), equating to a net debt: Adjusted EBITDA
ratio of 2.0x (2022: 3.8x). An explanation of the £1.4m
increase in net debt, excluding issue costs of debt, is provided
below.
|
|
2023
|
|
2022
|
|
|
|
£000
|
|
£000
|
|
|
|
|
|
|
|
|
Cash generated from operating
activities
|
4,972
|
|
9,839
|
|
|
Taxation paid
|
-
|
|
(491)
|
|
|
Capital expenditure
|
(3,472)
|
|
(3,337)
|
|
|
Issue costs of debt
|
-
|
|
(234)
|
|
|
Interest paid
|
(1,894)
|
|
(1,119)
|
|
|
|
|
|
|
|
|
Free cash flow
|
(394)
|
|
4,658
|
|
|
Proceeds on disposal of Doc Sol
(net of costs)
|
-
|
|
16
|
|
|
Payments in respect of business
combination
|
-
|
|
(1,227)
|
|
|
Proceeds from
borrowings
|
2,500
|
|
25,500
|
|
|
Repayments of
borrowings
|
(2,400)
|
|
(18,100)
|
|
|
Lease liability
payments
|
(975)
|
|
(885)
|
|
|
|
|
|
|
|
|
(Decrease) / increase in cash and
cash equivalents
|
(1,269)
|
|
9,962
|
|
|
Cash and cash equivalents/(bank
overdrafts) at start of period
|
6,136
|
|
(3,869)
|
|
|
Exchange differences
|
(21)
|
|
43
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end
of period
|
4,846
|
|
6,136
|
|
|
|
|
|
|
|
|
Bank borrowings
|
(23,000)
|
|
(22,900)
|
|
|
|
|
|
|
|
|
Net debt excluding issue costs of
debt and IFRS 16 liabilities
|
(18,154)
|
|
(16,764)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
9,139
|
|
4,356
|
|
|
|
|
|
|
|
|
|
|
|
| |
The Group generated £5.0m (2022:
£9.8m) of cash from operating activities and operating cashflow
before changes in working capital of £5.3m (2022:
£3.5m).
Cash conversion (C) in
2023 was 97% (2022: 245%).
Capital expenditure of £3.5m
(2022: £3.3m) was incurred relating to the ongoing investment in
the ICON platform and IT infrastructure.
A more detailed explanation of the
working capital movements is included in the analysis of the
consolidated statement of financial position. Further details of
the Group's revolving credit facilities are given in note
21.
(c) calculated as operating cash flow (being adjusted EBITDA
plus working capital) to adjusted EBITDA
Risk management
The Board has overall
responsibility for setting the risk appetite for the business and
for ensuring that the Group's ongoing risk profile aligns with
this. The Board is also responsible for identifying the business
risks and uncertainties faced by the Group that could have a
material adverse effect on the business, most of which are beyond
its control, and for determining the appropriate course of action
to manage these. It reviews a dynamic risk report quarterly, the
process behind which is monitored by the Audit and Risk committee.
The most significant current risks and uncertainties are described
below; the extent of the impact of each would naturally depend on
the precise nature and duration of the event. This list is not
exhaustive and there may be risks and uncertainties of which we are
currently unaware, or which we currently believe are immaterial,
that could have an adverse effect on the business.
|
Nature of
risk
|
How do we mitigate the
risk?
|
Trend
|
|
Disruptive technology changes the landscape of the market,
and the Group may not keep pace with product and service
innovation.
|
Maintel
has a dedicated product function to ensure that the Group's product
and service portfolio remains competitive. We have also
re-structured the business to ensure focus on accelerating
developments, including those of the ICON platform.
|
Risk
unchanged from last year
|
|
A
catastrophic event - for example a power outage or pandemic - means
that the Group is unable to service its customers.
|
All
employees can work remotely, and the Group's operational and
administrative servers are located and managed such that damage
from an outage is minimised. A business continuity plan is in place
which is reviewed regularly and enhanced from the results of
testing. The Group is also increasingly moving to cloud based
systems which are more readily available for a response to a
catastrophic event. ISO22301- Business Continuity is maintained and
externally audited on an annual basis.
|
Risk
unchanged from last year
|
|
Nature of
risk
|
How do we mitigate the
risk?
|
Trend
|
|
Cyber-attacks on Maintel, customer or supplier systems
rendering them unusable temporarily or permanently.
|
The Group
has an outsourced Security Operations Centre (SOC) and compliments
this with in-house systems and tools to ensure Maintel and its
customer systems are secured. Customer networks and data are
completely segregated from the Group's and data and systems are
replicated in more than one location. Maintel holds several
security accreditations including Cyber Essentials, ISO 27001
Information Security, ISO22301-Business Continuity and PCI DSS, all
of which entail extensive external auditing of the Group's systems
and processes. Maintel is also covered by cyber threat
insurance.
|
Risk
increased compared with last year
|
|
Loss of
key supplier through its business failure or termination of
relationship with Maintel.
|
The Group
has a multi-vendor strategy to reduce this risk and has defined
product managers who work closely with each supplier to maintain
constructive relationships and promptly identify potential issues,
formalised by monthly internal review meetings. Due to the
unprecedented semi-conductor shortage, we are monitoring our key
suppliers more closely for adverse impacts and have raised the risk
level accordingly.
|
Risk
reduced compared with last year
|
|
Loss of
major customer through its business failure or termination of
relationship with Maintel or Maintel's partners.
|
The
impact of this risk is partly mitigated by the fact that no
customer provides more than 10% of the Group's revenue.
We have developed various initiatives to manage
this risk including executive sponsorship and improved account
management and engagement. We are actively monitoring customer
churn and continue to develop our customer offering and service
delivery.
|
Risk
unchanged from last year
|
The Group's approach to financial
risk management is further explained in note 23 to the financial
statements.
FINANCIAL STATEMENTS
Consolidated statement of comprehensive
income
for
the year ended 31 December 2023
|
|
2023
|
|
2022
|
|
Note
|
£000
|
|
£000
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
4
|
101,262
|
|
91,036
|
|
|
|
|
|
Exceptional items
|
12
|
-
|
|
(278)
|
Other cost of sales
|
|
(70,022)
|
|
(62,900)
|
Cost of sales
|
|
(70,022)
|
|
(63,178)
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
31,240
|
|
27,858
|
|
|
|
|
|
Other operating
income
|
7
|
550
|
|
540
|
|
|
|
|
|
|
|
|
|
|
Intangibles
amortisation
|
13
|
(5,111)
|
|
(5,437)
|
Exceptional items
|
12
|
(6,979)
|
|
(626)
|
Share-based payments
|
27
|
(189)
|
|
(181)
|
Other administrative
expenses
|
7
|
(24,123)
|
|
(25,902)
|
Administrative
expenses
|
|
(36,402)
|
|
(32,146)
|
|
|
|
|
|
|
|
|
|
|
Operating loss
|
7
|
(4,612)
|
|
(3,748)
|
|
|
|
|
|
Financial expense
|
8
|
(2,168)
|
|
(1,141)
|
|
|
|
|
|
Loss before taxation
|
|
(6,780)
|
|
(4,889)
|
|
|
|
|
|
Taxation credit
|
9
|
1,429
|
|
528
|
|
|
|
|
|
Loss for the year
|
|
(5,351)
|
|
(4,361)
|
|
|
|
|
|
Other comprehensive
(expense)/income
for the year
|
|
|
|
|
Items that maybe reclassified to
profit or loss:
|
|
|
|
|
Exchange differences on
translation of foreign operations
|
|
(16)
|
|
19
|
|
|
|
|
|
Total comprehensive expense for
the year
|
|
(5,367)
|
|
(4,342)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share (pence)
|
|
|
|
|
|
Basic
|
10
|
(37.3)p
|
|
(30.4)p
|
|
Diluted
|
10
|
(37.3)p
|
|
(30.4)p
|
|
|
|
|
|
|
The attached notes form part of
these consolidated financial statements.
Consolidated statement of financial
position
at 31 December 2023
|
|
|
31 December
|
31 December
|
|
31 December
|
31 December
|
|
|
|
2023
|
2023
|
|
2022
|
2022
|
|
|
Note
|
£000
|
£000
|
|
£000
|
£000
|
|
Non-current
assets
|
|
|
|
|
|
|
|
Intangible assets
|
13
|
|
48,644
|
|
|
52,989
|
|
Right of
use assets
|
16
|
|
1,036
|
|
|
2,263
|
|
Property,
plant and equipment
|
15
|
|
1,109
|
|
|
1,381
|
|
Trade and
other receivables
|
18
|
|
-
|
|
|
90
|
|
Deferred
tax
|
20
|
|
471
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
51,260
|
|
|
56,723
|
|
Current
assets
|
|
|
|
|
|
|
|
Inventories
|
17
|
1,677
|
|
|
2,594
|
|
|
Trade and
other receivables
|
18
|
25,408
|
|
|
27,376
|
|
|
Cash and
cash equivalents
|
|
4,846
|
|
|
6,136
|
|
|
|
|
|
|
|
|
|
|
Total current
assets
|
|
|
31,931
|
|
|
36,106
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
|
83,191
|
|
|
92,829
|
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
|
Trade and
other payables
|
19
|
43,938
|
|
|
47,115
|
|
|
Lease
liabilities
|
22
|
909
|
|
|
820
|
|
|
Borrowings
|
21
|
2,322
|
|
|
22,726
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
47,169
|
|
|
70,661
|
|
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
|
|
|
Other
payables
|
19
|
502
|
|
|
370
|
|
|
Lease
liabilities
|
22
|
731
|
|
|
1,452
|
|
|
Deferred
tax
|
20
|
-
|
|
|
958
|
|
|
Borrowings
|
21
|
20,579
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Total non-current
liabilities
|
|
|
21,812
|
|
|
2,780
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
68,981
|
|
|
73,441
|
|
|
|
|
|
|
|
|
Total net assets
|
|
|
14,210
|
|
|
19,388
|
|
Equity
|
|
|
|
|
|
|
|
Issued
share capital
|
24
|
|
144
|
|
|
144
|
|
Share
premium
|
25
|
|
24,588
|
|
|
24,588
|
|
Other
reserves
|
25
|
|
64
|
|
|
80
|
|
Retained
losses
|
25
|
|
(10,586)
|
|
|
(5,424)
|
|
|
|
|
|
|
|
|
|
Total
equity
|
|
|
14,210
|
|
|
19,388
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
The consolidated financial
statements were approved and authorised for issue by the Board on
30 April 2024 and were signed on its behalf by:
Gab Pirona
Chief Financial Officer
The attached notes form part of
these consolidated financial statements.
Consolidated statement of
changes in equity
for the year ended 31
December 2023
|
|
|
Share
capital
|
Share
premium
|
Other reserves
|
Retained losses
|
Total
|
|
|
|
£000
|
£000
|
£000
|
£000
|
£000
|
|
|
|
|
|
|
|
|
Balance at 1 January 2022
|
|
144
|
24,588
|
61
|
(1,244)
|
23,549
|
|
|
|
|
|
|
|
|
Loss for the year
|
|
-
|
-
|
-
|
(4,361)
|
(4,361)
|
Other comprehensive
income:
|
|
|
|
|
|
|
Foreign currency translation
differences
|
|
-
|
-
|
19
|
-
|
19
|
Total comprehensive
expense
for the year
|
|
-
|
-
|
19
|
(4,361)
|
(4,342)
|
|
|
|
|
|
|
|
|
Transactions with owners in their
capacity as owners:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based payments
|
|
-
|
-
|
-
|
181
|
181
|
|
|
|
|
|
|
|
|
|
At 31 December 2022
|
|
144
|
24,588
|
80
|
(5,424)
|
19,388
|
|
|
|
|
|
|
|
|
Loss for the year
|
|
-
|
-
|
-
|
(5,351)
|
(5,351)
|
Other comprehensive
expense:
|
|
|
|
|
|
|
Foreign currency translation
differences
|
|
-
|
-
|
(16)
|
-
|
(16)
|
Total comprehensive
expense
for the year
|
|
-
|
-
|
(16)
|
(5,351)
|
(5,367)
|
|
|
|
|
|
|
|
|
|
Transactions with owners in their
capacity as owners:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based payments
|
|
-
|
-
|
-
|
189
|
189
|
|
|
|
|
|
|
|
|
|
At 31 December 2023
|
|
144
|
24,588
|
64
|
(10,586)
|
14,210
|
|
|
|
|
|
|
|
|
The attached notes form part of
these consolidated financial statements.
Consolidated statement of
cash flows
for
the year ended 31 December 2023
|
|
2023
|
|
2022
|
|
|
£000
|
|
£000
|
|
|
|
|
|
|
Operating activities
|
|
|
|
|
Loss before taxation
|
(6,780)
|
|
(4,889)
|
|
Adjustments for:
|
|
|
|
|
Net gain on disposal of Doc
Sol
|
-
|
|
(16)
|
|
Intangibles amortisation
|
5,111
|
|
5,437
|
|
Share-based payments
|
189
|
|
181
|
|
Depreciation of plant and
equipment
|
637
|
|
642
|
|
Depreciation of right of use
asset
|
835
|
|
940
|
|
Impairment of property, plant and
equipment
|
53
|
|
-
|
|
Impairment of right of use
assets
|
761
|
|
-
|
|
Impairment of intangible fixed
assets
|
2,288
|
|
-
|
|
Interest payable
|
2,168
|
|
1,141
|
|
Other non-cash items
|
-
|
|
67
|
|
|
|
|
|
|
Operating cash flows before changes in working
capital
|
5,262
|
|
3,503
|
|
|
|
|
|
|
Decrease/(increase) in
inventories
|
917
|
|
(1,585)
|
|
Decrease in trade and other
receivables
|
2,058
|
|
3,469
|
|
(Decrease)/increase in trade and
other payables
|
(3,265)
|
|
4,452
|
|
|
|
|
|
Cash generated from operating
activities
|
4,972
|
|
9,839
|
|
|
|
|
|
|
Tax received/(paid)
|
-
|
|
(491)
|
|
|
|
|
|
Net cash inflows from operating
activities
|
4,972
|
|
9,348
|
|
|
|
|
|
|
Investing activities
|
|
|
|
|
Purchase of plant and
equipment
|
(418)
|
|
(932)
|
|
Purchase of intangible
assets
|
(3,054)
|
|
(2,405)
|
|
Consideration for previously
acquired businesses
|
-
|
|
(1,227)
|
|
Net proceeds from disposal of Doc
Sol
|
-
|
|
16
|
|
|
|
|
|
Net cash outflows from investing
activities
|
(3,472)
|
|
(4,548)
|
|
|
|
|
|
Financing activities
|
|
|
|
|
Proceeds from borrowings
|
2,500
|
|
25,500
|
|
Repayment of borrowings
|
(2,400)
|
|
(18,100)
|
|
Lease liability
repayments
|
(975)
|
|
(885)
|
|
Interest paid
|
(1,894)
|
|
(1,119)
|
|
Issue costs of debt
|
-
|
|
(234)
|
|
|
|
|
|
|
Net cash (outflows)/inflows from financing
activities
|
(2,769)
|
|
5,162
|
|
|
|
|
|
Net (decrease)/increase in cash
and cash equivalents
|
(1,269)
|
|
9,962
|
|
|
|
|
Cash and cash equivalents/(bank
overdrafts) at start of year
|
6,136
|
|
(3,869)
|
Exchange differences
|
(21)
|
|
43
|
|
|
|
|
Cash and cash equivalents at end
of year
|
4,846
|
|
6,136
|
Consolidated statement of
cash flows
for
the year ended 31 December 2023 (continued)
The following cash and non-cash
movements have occurred during the year in relation to financing
activities from non-current liabilities:
Reconciliation of liabilities from financing
activities
Loans and borrowings (Note
21)
|
|
|
2023
|
2022
|
|
|
|
£000
|
£000
|
|
|
|
|
|
|
|
At 1
January
|
22,726
|
19,362
|
|
|
Proceeds
from borrowings
|
2,500
|
25,500
|
|
|
Repayment
of borrowings
|
(2,400)
|
(18,100)
|
|
|
Repayment
of bank overdraft
|
-
|
(3,869)
|
|
|
Payments
of interest on bank loans and overdraft
|
(1,821)
|
(1,022)
|
|
|
Interest
expense on bank loans and overdraft (non-cash movement)
|
2,009
|
950
|
|
|
Movement
on interest accrual (balance held within accruals - non-cash
movement)
|
(188)
|
72
|
|
|
Issue
costs of debt
|
-
|
(234)
|
|
|
Amortisation of issue costs (non-cash movement)
|
75
|
67
|
|
|
|
________
|
________
|
|
|
|
|
|
|
|
At 31
December
|
22,901
|
22,726
|
|
|
|
________
|
________
|
Lease liabilities (Note
22)
|
|
|
|
2023
|
2022
|
|
|
|
|
£000
|
£000
|
|
|
|
|
|
|
|
|
At 1
January
|
|
2,272
|
3,157
|
|
|
Capital
lease repayments
|
|
(975)
|
(885)
|
|
|
Interest
repayments
|
|
(73)
|
(97)
|
|
|
Interest
expense (non-cash movement)
|
|
73
|
97
|
|
|
New
leases (non-cash movement)
|
|
343
|
-
|
|
|
|
|
________
|
________
|
|
|
|
|
|
|
|
|
At 31
December
|
|
1,640
|
2,272
|
|
|
|
|
________
|
________
|
|
|
|
|
|
|
|
|
Current
|
|
909
|
820
|
|
|
Non-current
|
|
731
|
1,452
|
|
|
|
|
________
|
________
|
The notes on following pages form
part of these consolidated financial statements.
Notes forming part of the consolidated financial
statements
for
the year ended 31 December 2023
Maintel Holdings Plc is a public
limited company incorporated and domiciled in the UK, whose shares
are publicly traded on the Alternative Investment Market (AIM). Its
registered office and principal place of business is 160
Blackfriars Road, London SE1 8EZ.
The principal policies adopted in
the preparation of the consolidated financial statements are as
follows:
(a) Basis of
preparation
The consolidated financial
statements have been prepared in accordance with UK-adopted
International Accounting Standards in conformity with the
requirements of the Companies Act 2006.
(b) Basis of
consolidation
The consolidated financial
statements present the results of the Company and its subsidiaries
("the Group") as if they formed a single entity. Intercompany
transactions and balances between Group companies are therefore
eliminated in full.
Where the Company has control over
an investee, it is classified as a subsidiary. The Company controls
an investee if all three of the following elements are present:
power over the investee, exposure to variable returns from the
investee, and the ability of the investor to use its power to
affect those variable returns. Control is reassessed whenever facts
and circumstances indicate that there may be a change in any of
these elements of control.
The consolidated financial
statements incorporate the results of business combinations using
the acquisition method. In the consolidated statement of financial
position, the acquiree's identifiable assets, liabilities and
contingent liabilities are initially recognised at their fair
values at the acquisition date. The acquisition related costs are
included in the consolidated statement of comprehensive income on
an accruals basis. The results of acquired operations are included
in the consolidated statement of comprehensive income from the date
on which control is obtained.
(c) Rounding of
amounts
All amounts disclosed in the
financial statements and notes have been rounded to the nearest
thousand unless otherwise stated.
(d) Going
concern
The Group has a sound financial
record including strong operating cash flows derived from a
substantial level of recurring revenue across a range of sectors.
The facility with HSBC Bank plc ("HSBC") consisting of a revolving
credit facility ("RCF") of £20m with a £6m term loan on a reducing
basis, remained in place during the year and has been extended to
30 September 2025 in March 2024. Repayments started in
October 2022, and at 31 December 2023, £3m remained outstanding.
The key covenants include net leverage ratio and interest cover
tests, assessed on a quarterly basis. During 2023, the Company
successfully met the temporary milestones and HSBC being satisfied
that the recovery phase had been successfully completed, the
initial covenants of the loan were reinstated in early 2024. As a
consequence, the debt has been classified to long term liabilities
at 31 December 2023, whilst the debt had been reclassified as
current liabilities in 2022.
As highlighted in the risk
management section the Board has put robust business continuity
plans in place to ensure continuity of trading and operations.
Management believes that following the strategic pivot operated in
2023, with a product offering aligned to its strategy, the
pipeline will enable Maintel to deliver upside from the budgeted
revenue, whilst maintaining the efficiency of its cost base and
continuously enhancing margins.
The Group's forecasts and
projection models have been built on a prudent basis, taking into
account inflationary pressure, reasonable prudence with regard to
both project delivery and timing of pipeline conversion. The Board
has reviewed the model in detail, taking account of reasonably
possible changes in trading performance, including sensitivities in
pipeline conversion and renewal risk, together with further
mitigating actions it could take such as operating costs savings.
As a result, the Board believes that the Group has sufficient
headroom in its agreed funding arrangements to withstand a greater
negative impact on its cash flow than it currently
expects.
On this basis, the Directors have
a reasonable expectation that the Company and the Group have
adequate resources to continue in operational existence for the
foreseeable future. Therefore, the Group financial statements have
been prepared on a going concern basis.
(e) Revenue
Revenue is recognised to the
extent that it is probable that the economic benefits will flow to
the Group and can be reliably measured.
Revenue represents sales to
customers at invoiced amounts and commissions receivable from
suppliers, less value added tax.
Managed services
Managed services revenues are
recognised over time, over the relevant contract term, on the basis
that the customer simultaneously receives and consumes the benefits
provided by the Group's performance of the services over the
contract term. Where the Group's performance of its obligations
under a contract exceeds amounts received, accrued income is
recognised depending on the Group's billing rights. Where the
Group's performance of its obligations under a contract is less
than amounts received, deferred income is recognised as this is
also the point where the Group transfers the benefits of the goods
and services to the end customer.
Technology
Technology revenues for contracts
with customers, which include both supply of technology goods and
installation services, represent in substance one performance
obligation and result in revenue recognition at a point in
time, when the Group has fulfilled its
performance obligations under the relevant customer contract. Under
these contracts, the Group performs a significant integration
service which results in the technology goods and the integration
service being one performance obligation. Over the course of
the contract, the technology goods, which comprise both hardware
and software components, are customised through the integration
services to such an extent that the final customised technology
goods installed on completion are substantially different to their
form prior to the integration service. Revenue is recognised when
the integrated technology equipment and software has been installed
and accepted by the customer.
Network services
Revenues for network services are
comprised of call traffic, line rentals and data services, which
are recognised over time, for services provided up to the reporting
date, on the basis that the customer simultaneously receives and
consumes the benefits provided by the Group's performance of the
services over the contract term. Amounts received in advance of the
performance of the call traffic, line rentals and data services are
recognised as performance obligations and released to revenue as
the Group performs the services under the contract. Where the
Group's performance of its obligations under a contract are less
than amounts received, deferred income is recognised.
Mobile
Connection commission received
from the mobile network operators on fixed line revenues, are
allocated primarily to two separate performance obligations,
being:
(i) the
obligation to provide a hardware fund to end users for the supply
of handsets and other hardware kit - revenues are recognised under
these contracts at a point in time when the hardware goods are
delivered to the customer and the customer has control of the
assets; and
(ii) ongoing
service obligations to the customer - revenues are spread over the
course of the customer contract term.
In the case of (i) revenues are
recognised based on the fair value of the hardware goods provided
to the customer on delivery and for (ii) the residual amounts,
representing connection commissions less the hardware revenues, are
recognised over the customer contract term.
Customer overspend and bonus
payments are recognised monthly at a point in time when the Group's
performance obligations have been completed; these are also payable
by the network operators on a monthly basis.
(f) Leased assets
When the Group enters into a
lease, a lease liability and a right of use asset is
created.
A lease liability shall be
recognised at the commencement date of the lease term and will be
measured at the present value of the remaining lease payments
discounted using the Groups' incremental borrowing rate. In
determining the lease term, hindsight will be applied in respect of
leases which contain an option to terminate the lease. The lease
liability is subsequently increased for a constant periodic rate of
interest on the remaining balance of the lease liability and
reduced for lease payments. Interest on the lease liability is
recognised in the income statement.
A right of use asset shall be
recognised at the commencement date of the lease term. The right of
use asset will be measured at an amount equal to the lease
liability. The right of use asset will subsequently be measured at
cost less accumulated depreciation and any accumulated impairment
losses.
Depreciation for leased property
(disclosed as 'Land and buildings' in Note 16), motor vehicles and
office and computer equipment is charged to the statement of
comprehensive income on a straight-line basis over the shorter of
the lease term and the useful economic life of the asset. The
useful economic life of a right of use asset is based on that
assigned to equivalent owned assets, as disclosed in the 'Property,
plant and equipment' policy (n).
Where leases are 12 months or less
or of low value, payments made are expensed evenly over the period
of the lease.
Rentals receivable under operating
leases are credited to the consolidated statement of comprehensive
income on a straight-line basis over the term of the lease. The
aggregate cost of lease incentives offered is recognised as a
reduction of the rental income over the lease term on a
straight-line basis.
In addition, the carrying amount
of the right-of-use assets and lease liabilities are remeasured if
there is a modification, a change in the lease term or a change in
the fixed lease payments. The remeasured lease liability (and
corresponding right-of-use asset) is calculated using a revised
discount rate, based upon a revised incremental borrowing rate at
the time of the change.
(g) Employee benefits
The Group contributes to a number
of defined contribution pension schemes in respect of certain of
its employees, including those established under auto-enrolment
legislation. The amount charged in the consolidated statement of
comprehensive income represents the employer contributions payable
to the schemes in respect of the financial period. The assets of
the schemes are held separately from those of the Group in
independently administered funds.
The cost of all short-term
employee benefits is recognised during the period the employee
service is rendered.
Holiday pay is expensed in the
period in which it accrues.
(h) Exceptional items
Exceptional items are significant
items of non-recurring income or expenditure that have been
separately presented by virtue of their nature to enable a better
understanding of the Group's financial performance. Non-recurring
exceptional items are presented separately in the consolidated
statement of comprehensive income.
(i)
Interest
Interest income and expense is
recognised using the effective interest rate basis.
(j) Taxation
Current tax is the expected tax
payable on the taxable income for the year, together with any
adjustments to tax payable in respect of previous years.
Deferred tax is provided using the
balance sheet liability method, providing for temporary differences
between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation
purposes, except for differences arising on:
· The initial recognition of goodwill
· The initial recognition of an asset or liability in a
transaction which is not a business combination and at the time of
the transaction affects neither accounting nor taxable profit;
and
· Investments in subsidiaries where the Group is able to
control the timing of the reversal of the difference and it is
probable that the difference will not reverse in the foreseeable
future.
A deferred tax asset is recognised
only to the extent that it is probable that future taxable profits
and taxable temporary differences will be available against which
the asset can be utilised.
Management judgement is used in
determining the amount of deferred tax asset that can be
recognised, based upon the likely timing and level of future
taxable profits together with future tax planning
strategies.
The amount of the deferred tax
asset or liability is measured on an undiscounted basis and is
determined using tax rates that have been enacted or substantively
enacted by the date of the consolidated statement of financial
position and are expected to apply when the deferred tax
assets/liabilities are recovered/settled.
Deferred tax assets and
liabilities are offset when the Group has a legally enforceable
right to offset current tax assets and liabilities and the deferred
tax assets and liabilities relate to taxes levied by the same tax
authority on either:
· The same taxable Group company; or
· Different Group entities which intend either to settle
current tax assets and liabilities on a net basis, or to realise
the assets and settle the liabilities simultaneously, in each
future period in which significant amounts of deferred tax assets
or liabilities are expected to be settled or recovered.
(k) Dividends
Dividends unpaid at the reporting
date are only recognised as a liability at that date to the extent
that they are appropriately authorised and are no longer at the
discretion of the Company.
Proposed but unpaid dividends that
do not meet these criteria are disclosed in the notes to
the
consolidated financial
statements.
(l) Intangible assets
Goodwill
Goodwill represents the excess of
the fair value of the consideration of a business combination over
the acquisition date fair value of the identifiable assets,
liabilities and contingent liabilities acquired; the fair value of
the consideration comprises the fair value of assets given. Direct
costs of acquisition are recognised immediately as an expense.
Goodwill is capitalised as an intangible asset and carried at cost
with any impairment in carrying value being charged to the
consolidated statement of comprehensive income.
Customer relationships
Customer relationships are stated
at fair value where acquired through a business combination, less
accumulated amortisation. Customer relationships are amortised over
their estimated useful lives of six years to eight
years.
Brands
Brands are stated at fair value
where acquired through a business combination less accumulated
amortisation. Brands are amortised over their estimated useful
lives, being eight years in respect of the ICON brand.
Product platform
The product platform is stated at
cost less accumulated amortisation. Where these have been acquired
through a business combination, the cost is the fair value
allocated less accumulated amortisation. The product platform is
amortised over its estimated useful life of eight years.
Software (Microsoft licences and Callmedia)
Software is stated at cost less
accumulated amortisation. Where these assets have been acquired
through a business combination, the cost is the fair value
allocated in the acquisition accounting. Software is amortised over
its estimated useful life of three years in respect of the
Microsoft licences.
The net book value of the
Callmedia capitalised systems, software and development costs has
been impaired in the year in line with the decision made in 2023 to
exit the Callmedia business by January 2024. See Note 13 for
further information.
Licences (third-party subscription
licences)
Third-party subscription licences
are stated at cost less accumulated amortisation. Where these
assets have been acquired through a business combination, the cost
is the fair value allocated in the acquisition accounting. Licences
are amortised over their estimated useful lives of three
years.
Other
Other intangible assets includes
stock management platforms which is managed by third parties. Other
intangibles are amortised over their estimated useful lives, being
5 years.
(m) Impairment of non-current
assets
Impairment tests on goodwill are
undertaken annually on 31 December. Customer relationships and
other assets are subject to impairment tests whenever events or
changes in circumstances indicate the carrying amount may not be
recoverable. Where the carrying value of an asset exceeds its
recoverable amount (being the higher of value in use and fair value
less costs to sell), the asset is written down accordingly in the
administrative expenses line in the consolidated statement of
comprehensive income and, in respect of goodwill impairments, the
impairment is never reversed.
Where it is not possible to
estimate the recoverable amount of an individual asset, the
impairment test is carried out on the asset's cash-generating unit
(being the lowest Group of assets in which the asset belongs for
which there are separately identifiable cash flows). Goodwill is
allocated on initial recognition to each of the Group's
cash-generating units that are expected to benefit from the
synergies of the combination giving rise to goodwill.
(n) Property, plant and
equipment
Property, plant and equipment is
stated at cost, less accumulated depreciation and any impairment in
value.
Depreciation is provided to write
off the cost, less estimated residual values, of all tangible fixed
assets, other than freehold land, over their expected useful
economic lives, at the following rates:
|
|
Office and computer
equipment
|
-
|
25% straight line
|
|
|
Motor vehicles
|
-
|
25% straight line
|
|
|
Leasehold improvements
|
-
|
over the remaining period of the
lease
|
Property, plant and equipment
acquired in a business combination is initially recognised at its
fair value.
(o) Inventories
Inventories comprise (i)
maintenance stock, being replacement parts held to service
customers' telecommunications systems, and (ii) stock held for
resale, being stock purchased for customer orders which has not
been installed at the end of the financial period. Inventories are
valued at the lower of cost and net realisable value.
(p) Cash and cash
equivalents
Cash and cash equivalents comprise
cash balances and short-term deposits with an original maturity of
three months or less, held for meeting short term
commitments.
(q) Financial assets and
liabilities
The Group's financial assets and
liabilities mainly comprise cash, borrowings, trade and other
receivables, trade and other payables, lease liabilities and
derivative financial instruments.
Trade and other receivables are
not interest bearing and are stated at their amortised cost as
reduced by appropriate allowances for irrecoverable amounts or
additional costs required to effect recovery.
The Group reviews the amount of
credit loss associated with its trade receivables based on forward
looking estimates that take into account current and forecast
credit conditions. The Group has applied the Simplified Approach
applying a provision matrix based on number of days past due to
measure lifetime expected credit losses and after taking into
account customer sectors with different credit risk profiles and
current and forecast trading conditions.
Trade and other payables are not
interest bearing and are stated at their amortised cost.
Derivative financial instruments
held by the Group at 31 December 2022 represented foreign exchange
contracts held to manage the cash flow exposures of forecast
transactions denominated in foreign currencies. The Group entered
into derivative financial instruments principally with financial
institutions with investment grade credit ratings. No such
instruments were held at December 2023, as the Group had no
material exposure to foreign currency at that
time.
Foreign exchange contracts are
held at fair value using techniques which employ the use of market
observable inputs. The key inputs used in valuing the derivatives
are the exchange rates at year end between Pound Sterling and US
Dollar. Market values have been used to determine fair value and
have been obtained from an independent third party. Any movements
in the fair value of the foreign exchange contracts are recognised
in the consolidated statement of comprehensive income as no hedge
accounting is applied.
(r) Borrowings
Interest bearing bank loans and
overdrafts are initially recorded at the value of the amount
received, net of attributable transaction costs. Interest bearing
borrowings are subsequently stated at amortised cost with any
difference between cost and redemption value being recognised in
the consolidated statement of comprehensive income over the period
of the borrowing using the effective interest method.
(s) Foreign currency
The presentation currency of the
Group is Pound Sterling. All Group companies at 31 December 2023
have a functional currency of Pound Sterling, consistent with the
presentation currency of the Group's consolidated financial
statements. Transactions in currencies other than Pound Sterling
are recorded at the rates of exchange prevailing on the dates of
the transactions.
As at 31 December 2023, the Group,
did not hold any interest in foreign subsidiaries, following the
transfer of the control of Maintel International Limited ("MIL") to
the liquidators of MIL. Certain non-material contracts had been
transferred to Maintel Europe Limited ("MEL") prior to the
appointment of the liquidator. See Note 14 for further
information.
On consolidation the results of
MIL, which are included in the consolidated statement of
comprehensive income up to the transfer of the entity to the
liquidators, are translated into Pound Sterling, at rates
approximating those ruling when the transactions took place. The
monetary assets and liabilities of MIL are translated at the rate
ruling at the reporting date. Non-monetary items that are
measured at historical cost are translated using rates
approximating those ruling at the dates of the initial
transactions.
Exchange differences on
retranslation of the foreign subsidiary are recognised in other
comprehensive income and accumulated in a translation
reserve.
(t)
Share-based payments
The Group uses the Black-Scholes
Model to calculate the appropriate fair value at the date the
options are granted to the employee.
Where employees are rewarded using
equity settled share-based payments, the fair values of employees'
services are determined indirectly by reference to the fair value
of the instrument granted to the employee. This fair value is
appraised at the grant date.
All equity-settled share-based
payments are ultimately recognised as an expense in the income
statement with a corresponding credit to reserves.
If vesting periods apply, the
expense is allocated over the vesting periods, based on the best
available estimate of the number of share options expected to vest.
Estimates are revised subsequently if there is any indication that
the number of share options expected to vest differs from previous
estimates. Any cumulative adjustment prior to vesting is
recognised in the current year. No adjustment is made to any
expense recognised in prior years if share options that have vested
are not exercised.
(u) Accounting standards
issued
The following standards and
amendments to standards were issued and adopted in the year, with
no material impact on the financial statements:
· IFRS
17 - Insurance Contracts
· Deferred tax related to assets and liabilities arising from a
single transaction - amendments to IAS 12
· International tax reform and temporary exception for deferred
tax assets and liabilities related to the OECD pillar two income
taxes - amendments to IAS 12
· Definition of Accounting Estimates - amendments to IAS
8
· Disclosure of Material Accounting Policies - amendments to
IAS 1 and IFRS Practice Statement 2
There were no other new accounting
standards issued that have been adopted in the year.
(v) Standards in issue but not yet
effective
At the date of authorisation of
these financial statements there were amendments to standards which
were in issue, but which were not yet effective, and which have not
been applied. The principal ones were:
Effective for annual periods beginning on or after 1 January
2024
· Lease liability in a sale and leaseback transaction -
amendments to IFRS 16
· Non-current liabilities with covenants - amendments to IAS
1
· Supplier finance - amendments to IAS 7 and IFRS 7
Effective for annual periods beginning on or after 1 January
2025
· Lack
of exchangeability in currencies - amendments to IAS 21
The Directors do not expect the
adoption of these amendments to standards to have a material impact
on the financial statements.
|
3
|
Accounting estimates and judgements
|
In the process of applying the
Group's accounting policies, management has made various estimates,
assumptions and judgements, with those likely to contain the
greatest degree of uncertainty being summarised below:
Impairment of non-current assets
The Group is required to test, on
an annual basis, whether goodwill has suffered any impairment. The
Group is also required to test other finite life intangible assets
for impairment where impairment indicators are present. The
recoverability of assets subject to impairment reviews is assessed
based on whether the carrying value of assets can be supported by
the net present value of future cash flows derived from such
assets, using cash flow projections which have been discounted at
an appropriate rate. In calculating the net present value of the
future cash flows, certain assumptions are required to be made in
respect of uncertain matters.
In particular, management
exercises estimation in determining assumptions for revenue growth
rates and gross margins for future periods which are important
components of future cash flows, and also in determining the
appropriate discount rates which are used across the Group's cash
generating units (refer to Note
13).
Year-ended 31 December 2023
For management reporting purposes
and operationally, the Group consists of three business segments:
(i) managed service and technology sales, (ii) network services,
and (iii) mobile services. Revenue from managed services, network
services and mobile is recognised over time and technology revenue
is recognised at a point in time. 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 chief operating decision maker
has been identified as the Board, which assesses the performance of
the operating segments based on revenue and gross
profit.
The Board does not regularly
review the aggregate assets and liabilities of its segments and
accordingly an analysis of these is not provided.
|
|
|
Managed service and
technology
|
Network
services
|
Mobile
|
|
Total
|
|
|
|
£000
|
£000
|
£000
|
|
£000
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
52,097
|
45,317
|
3,848
|
|
101,262
|
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
12,285
|
17,387
|
1,568
|
|
31,240
|
|
|
|
|
|
|
|
|
|
|
Other
operating income
|
|
|
|
|
550
|
|
|
|
|
|
|
|
|
|
|
Other
administrative expenses
|
|
|
|
|
(24,123)
|
|
|
|
|
|
|
|
|
|
|
Share-based payments
|
|
|
|
|
(189)
|
|
|
|
|
|
|
|
|
|
|
Intangibles amortisation
|
|
|
|
|
(5,111)
|
|
|
|
|
|
|
|
|
|
|
Exceptional items
|
|
|
|
|
(6,979)
|
|
|
|
|
|
|
|
|
|
|
Operating
loss
|
|
|
|
|
(4,612)
|
|
|
|
|
|
|
|
|
|
|
Financial
expense
|
|
|
|
|
(2,168)
|
|
|
|
|
|
|
|
|
|
|
Loss
before taxation
|
|
|
|
|
(6,780)
|
|
|
|
|
|
|
|
|
|
|
Taxation
|
|
|
|
|
1,429
|
|
|
|
|
|
|
|
|
|
|
Loss
after taxation
|
|
|
|
|
(5,351)
|
|
|
|
|
|
|
|
|
Revenue is wholly attributable to
the principal activities of the Group in the current and prior
year.
Analysis of
revenue by geographical location:
|
|
2023
|
2022
|
|
|
|
£000
|
£000
|
|
|
|
|
|
|
|
United
Kingdom
|
99,526
|
89,037
|
|
|
European
Union
|
1,655
|
1,951
|
|
|
Rest of
the world
|
81
|
48
|
|
|
|
________
|
________
|
|
|
|
101,262
|
91,036
|
|
|
|
________
|
________
|
In 2023 the Group had no customer
(2022: None) which accounted for more than 10% of its
revenue.
Analysis of revenue by timing of
recognition:
|
|
2023
|
2022
|
|
|
|
£000
|
£000
|
|
|
|
|
|
|
|
Revenue
recognised at a point in time
|
26,290
|
20,900
|
|
|
Revenue
recognised over time
|
74,972
|
70,136
|
|
|
|
________
|
________
|
|
|
|
|
|
|
|
|
101,262
|
91,036
|
|
|
|
________
|
________
|
Analysis of movements in deferred
income:
|
|
2023
|
2022
|
|
|
|
£000
|
£000
|
|
|
|
|
|
|
|
Deferred
income - opening balance
|
(20,135)
|
(18,572)
|
|
|
Revenue
recognised in the year
|
17,676
|
17,188
|
|
|
New
revenue deferrals in the year
|
(19,407)
|
(18,751)
|
|
|
|
________
|
________
|
|
|
|
|
|
|
|
Deferred
income - closing balance
|
(21,866)
|
(20,135)
|
|
|
|
________
|
________
|
Analysis of other
expenses:
|
|
|
Managed service and
technology
|
Network
services
|
Mobile
|
Central
|
Total
|
|
|
|
£000
|
£000
|
£000
|
£000
|
£000
|
|
|
Other
expenses
|
|
|
|
|
|
|
|
Intangibles amortisation
|
-
|
-
|
-
|
(5,111)
|
(5,111)
|
|
|
Depreciation
|
-
|
-
|
-
|
(1,472)
|
(1,472)
|
|
|
Exceptional items
|
(1,104)
|
(1,516)
|
-
|
(4,359)
|
(6,979)
|
Exceptional items attributed to
Managed service and technology relate to transformation costs
incurred. Please see Note 12 for further details.
Year-ended 31 December 2022
|
|
|
Managed service and
technology
|
Network
services
|
Mobile
|
|
Total
|
|
|
|
£000
|
£000
|
£000
|
|
£000
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
46,509
|
40,093
|
4,434
|
|
91,036
|
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
11,399
|
14,639
|
1,820
|
|
27,858
|
|
|
|
|
|
|
|
|
|
|
Other
operating income
|
|
|
|
|
540
|
|
|
|
|
|
|
|
|
|
|
Other
administrative expenses
|
|
|
|
|
(25,902)
|
|
|
|
|
|
|
|
|
|
|
Share-based payments
|
|
|
|
|
(181)
|
|
|
|
|
|
|
|
|
|
|
Intangibles amortisation
|
|
|
|
|
(5,437)
|
|
|
|
|
|
|
|
|
|
|
Exceptional items
|
|
|
|
|
(626)
|
|
|
|
|
|
|
|
|
|
|
Operating
loss
|
|
|
|
|
(3,748)
|
|
|
|
|
|
|
|
|
|
|
Financial
expense
|
|
|
|
|
(1,141)
|
|
|
|
|
|
|
|
|
|
|
Loss
before taxation
|
|
|
|
|
(4,889)
|
|
|
|
|
|
|
|
|
|
|
Taxation
|
|
|
|
|
528
|
|
|
|
|
|
|
|
|
|
|
Loss
after taxation
|
|
|
|
|
(4,361)
|
|
|
|
|
|
|
|
|
Analysis of other
expenses:
|
|
|
Managed service and
technology
|
Network
services
|
Mobile
|
Central
|
Total
|
|
|
|
£000
|
£000
|
£000
|
£000
|
£000
|
|
|
Other
expenses
|
|
|
|
|
|
|
|
Intangibles amortisation
|
-
|
-
|
-
|
(5,437)
|
(5,437)
|
|
|
Depreciation
|
-
|
-
|
-
|
(1,582)
|
(1,582)
|
|
|
Exceptional items
|
(278)
|
-
|
-
|
(626)
|
(904)
|
Exceptional items attributed to
Managed service and technology in the year to 31 December 2022
relate to foreign exchange expenses on delayed orders. Please see
Note 12 for further details.
|
5
|
Employees
|
|
|
|
|
|
|
|
|
2023
|
2022
|
|
|
The
average number of employees, including Directors, during the year
was:
|
Number
|
Number
|
|
|
|
|
|
|
|
Corporate
and administration
|
98
|
88
|
|
|
Sales and
customer service
|
162
|
175
|
|
|
Technical
and engineering
|
222
|
230
|
|
|
|
________
|
________
|
|
|
|
|
|
|
|
Total
employees
|
482
|
493
|
|
|
|
________
|
________
|
|
|
|
|
|
|
|
Staff
costs, including Directors, consist of:
|
£000
|
£000
|
|
|
|
|
|
|
|
Wages and
salaries
|
26,167
|
27,004
|
|
|
Social
security costs
|
2,859
|
3,317
|
|
|
Pension
costs
|
709
|
748
|
|
|
Share-based payments
|
189
|
181
|
|
|
|
________
|
________
|
|
|
|
|
|
|
|
Total
staff costs
|
29,924
|
31,250
|
|
|
|
________
|
________
|
|
|
|
|
| |
The Group makes contributions to
defined contribution personal pension schemes for employees and
Directors. The assets of the schemes are separate from those of the
Group. Pension contributions totalling £166,000 (2022: £167,000)
were payable to the schemes at the year-end and are included in
other payables.
|
6
|
Directors' remuneration
|
The remuneration of the Company
Directors was as follows:
|
|
|
2023
|
2022
|
|
|
|
£000
|
£000
|
|
|
|
|
|
|
|
Directors' emoluments
|
1,383
|
833
|
|
|
Pension
contributions
|
36
|
17
|
|
|
|
________
|
________
|
|
|
|
|
|
|
|
Total
Directors' remuneration
|
1,419
|
850
|
|
|
|
________
|
________
|
Included in the above is the
remuneration of the highest paid Director as follows:
|
|
|
2023
|
2022
|
|
|
|
£000
|
£000
|
|
|
|
|
|
|
|
Director's emoluments
|
492
|
326
|
|
|
Pension
contributions
|
12
|
9
|
|
|
|
________
|
________
|
|
|
|
|
|
|
|
Total
remuneration of the highest paid Director
|
504
|
335
|
|
|
|
________
|
________
|
The Group paid contributions into
defined contribution personal pension schemes in respect of
six Directors during the year, two of whom were auto-enrolled
at minimal contribution levels, three were on defined contributions
and one on both auto-enrolment and defined contribution schemes
(2022: six, two auto-enrolled, three defined contribution, one both
defined contribution and auto enrolled).
Further details of Director
remuneration are shown in the Remuneration Committee report
included in the annual report.
|
7
|
Operating
loss
|
|
|
|
|
|
2023
|
2022
|
|
|
|
£000
|
£000
|
|
|
This has
been arrived at after charging/(crediting):
|
|
|
|
|
|
|
|
|
|
Depreciation of property, plant and equipment
|
637
|
642
|
|
|
Depreciation of right of use assets
|
835
|
940
|
|
|
Amortisation of intangible fixed assets
|
5,111
|
5,437
|
|
|
Impairment of property, plant and
equipment[1]
|
53
|
-
|
|
|
Impairment of right of use assets[1]
|
761
|
-
|
|
|
Impairment of intangible fixed
assets[1]
|
2,288
|
-
|
|
|
Foreign
exchange movement
|
(36)
|
232
|
|
|
Fees
payable to the Company's auditor for the audit of the parent and
consolidated accounts
|
59
|
55
|
|
|
Fees
payable to the Company's auditor for other services:
|
|
|
|
|
- Audit
of the Company's subsidiaries pursuant to legislation
|
122
|
113
|
|
|
-
Audit-related assurance services
|
22
|
24
|
|
|
Fees
payable to other advisors for tax compliance services
|
18
|
17
|
|
|
|
|
|
|
|
|
________
|
________
|
|
|
|
|
|
[1] All impairment charges have been recognised in exceptional
items. Please see Note 12 for further details.
Other income in the year relates
primarily to research and development credits of £331k (2022:
£540k).
|
8
|
Financial
expense
|
|
|
|
|
|
2023
|
2022
|
|
|
|
|
£000
|
£000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
payable on bank loans
|
2,084
|
1,017
|
|
|
|
Interest
payable on deferred consideration
|
-
|
27
|
|
|
|
Interest
expense on leases
|
73
|
97
|
|
|
|
Other
interest payable
|
11
|
-
|
|
|
|
|
________
|
________
|
|
|
|
|
|
|
|
|
|
Total
financial expense
|
2,168
|
1,141
|
|
|
|
|
________
|
________
|
|
|
|
|
|
|
|
Interest payable on bank loans
includes £75,000 (2022: £67,000) amortisation of issue
costs.
|
9
|
Taxation
|
|
|
|
|
|
2023
|
2022
|
|
|
|
£000
|
£000
|
|
|
UK corporation
tax
|
|
|
|
|
Corporation tax on UK loss for the year
|
-
|
-
|
|
|
Adjustment for prior year
|
-
|
67
|
|
|
|
________
|
________
|
|
|
|
-
|
67
|
|
|
Overseas
tax
|
|
|
|
|
Corporation tax on overseas profit for the year
|
-
|
5
|
|
|
|
________
|
________
|
|
|
Total
current taxation on loss on ordinary activities
|
-
|
72
|
|
|
|
|
|
|
|
Deferred tax (Note
20)
|
|
|
|
|
Current
year
|
(1,383)
|
(895)
|
|
|
Adjustment for prior year
|
(46)
|
295
|
|
|
|
________
|
________
|
|
|
Total
deferred taxation
|
(1,429)
|
(600)
|
|
|
|
|
|
|
|
|
________
|
________
|
|
|
Total
taxation credit on loss on ordinary activities
|
(1,429)
|
(528)
|
|
|
|
________
|
________
|
The standard rate of corporation
tax in the UK for the year was 23.52% (2022: 19.00%), and therefore
the Group's UK subsidiaries are taxed at that rate. The differences
between the total tax shown above and the amount calculated by
applying the standard rate of UK corporation tax to the loss before
tax are as follows:
|
|
|
2023
|
2022
|
|
|
|
£000
|
£000
|
|
|
|
|
|
|
|
Loss
before tax
|
(6,780)
|
(4,889)
|
|
|
|
________
|
________
|
|
|
|
|
|
|
|
Loss at
the standard rate of corporation tax in the UK of 23.52%
(2022:
19.00%)
|
(1,595)
|
(929)
|
|
|
|
|
|
|
|
Effect
of:
|
|
|
|
|
Net
expense not deductible
|
213
|
-
|
|
|
Net
income not taxable
|
-
|
(42)
|
|
|
Adjustments relating to prior years
|
(46)
|
465
|
|
|
Effects
of overseas tax rates
|
-
|
(3)
|
|
|
Effects
of changes in tax rates
|
(25)
|
6
|
|
|
Capital
allowances less than/(in excess) of depreciation
|
21
|
(25)
|
|
|
Other
|
3
|
-
|
|
|
|
________
|
________
|
|
|
|
|
|
|
|
Total
taxation credit on loss on ordinary activities
|
(1,429)
|
(528)
|
|
|
|
________
|
________
|
Included within 'Adjustments
relating to prior years' is £Nil (2022: £103,000) in relation to
R&D expenditure credits for previous accounting periods. The
£46,000 adjustment for the year ended 31 December 2023 relates to a
decrease in deferred tax timing differences on losses and other
items per the final 2022 trading subsidiary Corporation tax return
as compared to the draft tax return available at the time of
signing of the 2022 financial statements.
Factors that may affect future tax
charges/credits:
The rate of UK Corporation tax
increased from 19% to 25% on 6 April 2023. Existing deferred tax
assets and liabilities had been calculated at the rate at which the
relevant balances were expected to be recovered or settled. This
rate was 25% and therefore existing deferred tax liabilities have
not had to be remeasured.
There are no future factors at the
reporting date that are expected to impact the Group's future tax
charge. The Group is not within the scope of the OECD Pillar Two
model rules.
Earnings per share is calculated
by dividing the loss after tax for the year by the weighted average
number of shares in issue for the year, these figures being as
follows:
|
|
|
2023
|
2022
|
|
|
£000
|
£000
|
|
|
|
|
|
|
Loss
after tax
|
(5,351)
|
(4,361)
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
Intangibles amortisation (net of non-acquired
element)
|
3,724
|
4,051
|
|
|
Exceptional items (Note 12)
|
6,979
|
904
|
|
|
Tax
relating to above adjustments
|
(2,176)
|
(1,184)
|
|
|
Share-based payments
|
189
|
181
|
|
|
Interest
charge on deferred consideration
|
-
|
27
|
|
|
Tax
adjustments relating to prior years
|
30
|
67
|
|
|
Adjustment for the tax impact of the change in the deferred
tax rate
|
-
|
81
|
|
|
|
________
|
________
|
|
|
|
|
|
|
|
Adjusted
earnings used in adjusted EPS
|
3,395
|
(234)
|
|
|
|
________
|
________
|
Adjustment for intangibles
amortisation is in relation to intangible assets acquired via
business combinations.
|
|
|
2023
|
2022
|
|
|
Number
|
Number
|
|
|
|
(000s)
|
(000s)
|
|
|
|
|
|
|
|
Weighted
average number of ordinary shares of 1p each used as the
denominator in calculating basic EPS and diluted EPS
|
14,362
|
14,362
|
|
|
Potentially dilutive shares
|
76
|
11
|
|
|
|
________
|
________
|
|
|
Weighted
average number of ordinary shares of 1p each used as the
denominator in calculating diluted Adjusted EPS
|
14,438
|
14,362
|
|
|
|
________
|
________
|
6
|
Earnings/(loss) per
share
|
|
|
|
|
Basic
|
(37.3)p
|
(30.4)p
|
|
|
Diluted
|
(37.3)p
|
(30.4)p
|
|
|
Adjusted
- basic
|
23.6p
|
(1.6)p
|
|
|
Adjusted
- diluted
|
23.5p
|
(1.6)p
|
The adjustments to losses have
been made in order to provide a clearer picture of the trading
performance of the Group after removing amortisation and
non-recurring expenses. 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 shares, 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.
Potentially dilutive shares have
not been included in the diluted EPS for the current or prior year
on the basis that they are anti-dilutive, however they may become
dilutive in future periods.
11
|
Adjusted earnings before
interest, tax, depreciation and amortisation (Adjusted
EBITDA)
|
|
|
|
|
Note
|
2023
|
2022
|
|
|
|
|
£000
|
£000
|
|
|
|
|
|
|
|
|
Loss
before tax
|
|
(6,780)
|
(4,889)
|
|
|
Financial
expense
|
8
|
2,168
|
1,141
|
|
|
Depreciation of property, plant and equipment
|
15
|
637
|
642
|
|
|
Depreciation of right of use assets
|
16
|
835
|
940
|
|
|
Amortisation of intangible fixed assets
|
13
|
5,111
|
5,437
|
|
|
|
|
________
|
________
|
|
|
|
|
|
|
|
|
EBITDA
|
|
1,971
|
3,271
|
|
|
|
|
________
|
________
|
|
|
|
|
|
|
|
|
Share-based payments
|
27
|
189
|
181
|
|
|
Exceptional items
|
12
|
6,979
|
904
|
|
|
|
|
________
|
________
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
9,139
|
4,356
|
|
|
|
|
________
|
________
|
|
|
|
|
|
|
| |
The costs analysed below have been
shown as exceptional items in the income statement as they are not
considered to be part of the Group's recurring income or
expenses:
|
|
|
|
2023
|
2022
|
|
|
|
|
£000
|
£000
|
|
|
|
|
|
|
|
|
Exceptional items included
within cost of sales
|
|
|
|
|
|
Transformation costs
|
|
-
|
-
|
|
|
Foreign
exchange expense on delayed orders
|
|
-
|
278
|
|
|
|
|
|
|
|
|
Exceptional items included
within administrative expenses
|
|
|
|
|
|
Transformation costs
|
|
5,051
|
-
|
|
|
Staff
restructuring and other employee related costs
|
|
1,548
|
417
|
|
|
Fees
relating to revised credit facilities agreement
|
|
380
|
162
|
|
|
Costs
relating to an onerous property lease
|
|
-
|
63
|
|
|
Gain on
disposal of Doc Sol
|
|
-
|
(16)
|
|
|
|
|
________
|
________
|
|
|
|
|
|
|
|
|
Total
exceptional items
|
|
6,979
|
904
|
|
|
|
|
________
|
________
|
Exceptional items included within cost of
sales
Foreign exchange expense on
delayed orders in the prior year of £278,000 related to the loss
incurred on a contract that faced significant delay due to the
industry-wide chip shortages. This is considered to be exceptional
circumstances given the 18-month wait between orders with the
supplier and installation for the client (15 months having elapsed
at 31 December 2022). These delays resulted in the Group incurring
a loss on fluctuating USD to GBP exchange rates as the required
materials were invoiced in USD.
Exceptional items included within administrative
expenses
Transformation costs of £5,051,000
(2022: £Nil) incurred in the year include the following items
relating to the ongoing strategic review of the business which was
implemented during the year:
Impairment charges amounting to
£2,288,000 (2022: £Nil) relating to previously capitalised
'Callmedia' software development and development costs of £333,000
net of associated revenues, resultant to the decision made during
the year to discontinue the development of our own "Callmedia"
Contact Centre product line, including the CX Now public cloud
CCaaS variant. Refer to Note 13 Intangible assets.
Onerous lease costs of £1,342,000
include £761,000 relating to the impairment of the right of use
asset in relation to the Blackfriars Road London office lease,
£53,000 relating to the impairment of leasehold improvements and
other onerous operating lease costs of £528,000. In addition,
exceptional service charges of £237,000 were incurred in the year
also relating to the downsizing of the London office
space.
Other transformation costs in the
year of £851,000, included professional fees from third party
specialists engaged by the company to perform a strategic and
product review of the business and costs associated with the
implementation of the results of the strategic and full product
review.
Staff restructuring and other
employee related costs of £1,548,000 (2022: £417,000) principally
include redundancy costs.
Fees relating to the credit
facilities agreement of £380,000 (2022: £162,000) include
associated professional fees incurred to negotiate the temporary
terms in place during the phase of transformation of the Company.
In 2022, fees of £162,000 included the professional fees associated
with the negotiating of the facility that commenced in that
year.
Onerous lease costs in the prior
year of £63,000 relate to the Fareham property and included the
remaining expected costs of completion in relation to the onerous
contract to July 2023.
|
|
|
Goodwill
|
Customer
relationships
|
Brands
|
Product
platform
|
Software and
licences
|
Other
|
Total
|
|
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
|
|
Cost
|
|
|
|
|
|
|
|
|
|
At 1
January 2022
|
40,516
|
43,721
|
3,480
|
2,276
|
8,623
|
250
|
98,866
|
|
|
Additions
|
-
|
-
|
-
|
362
|
2,043
|
-
|
2,405
|
|
|
|
_______
|
_______
|
______
|
_______
|
_______
|
______
|
______
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31
December 2022
|
40,516
|
43,721
|
3,480
|
2,638
|
10,666
|
250
|
101,271
|
|
|
Additions
|
-
|
-
|
-
|
220
|
2,834
|
-
|
3,054
|
|
|
|
_______
|
_______
|
______
|
_______
|
_______
|
______
|
______
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 December
2023
|
40,516
|
43,721
|
3,480
|
2,858
|
13,500
|
250
|
104,325
|
|
|
|
_______
|
_______
|
______
|
_______
|
_______
|
______
|
______
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortisation and
Impairment
|
|
|
|
|
|
|
|
|
|
At 1
January 2022
|
317
|
33,479
|
2,524
|
1,300
|
5,183
|
42
|
42,845
|
|
|
Amortisation in the year
|
-
|
3,419
|
410
|
316
|
1,242
|
50
|
5,437
|
|
|
|
_______
|
_______
|
______
|
_______
|
_______
|
______
|
______
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31
December 2022
|
317
|
36,898
|
2,934
|
1,616
|
6,425
|
92
|
48,282
|
|
|
Amortisation in the year
|
-
|
3,062
|
410
|
352
|
1,237
|
50
|
5,111
|
|
|
Impairment in the year
|
-
|
-
|
-
|
-
|
2,288
|
-
|
2,288
|
|
|
|
_______
|
_______
|
______
|
_______
|
_______
|
______
|
______
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 December
2023
|
317
|
39,960
|
3,344
|
1,968
|
9,950
|
142
|
55,681
|
|
|
|
_______
|
_______
|
______
|
_______
|
_______
|
______
|
______
|
|
|
Net book
value
|
|
|
|
|
|
|
|
|
|
At 31
December 2023
|
40,199
|
3,761
|
136
|
890
|
3,550
|
108
|
48,644
|
|
|
|
_______
|
_______
|
______
|
_______
|
_______
|
______
|
______
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31
December 2022
|
40,199
|
6,823
|
546
|
1,022
|
4,241
|
158
|
52,989
|
|
|
|
_______
|
_______
|
______
|
_______
|
_______
|
______
|
______
|
Amortisation charges for the year
have been charged through administrative expenses in the statement
of comprehensive income.
Included within the amortisation
charge for the year ended 31 December 2023 is £1,387,000 (2022:
£1,386,000) relating to amortisation from non-acquired intangible
assets (here meaning assets not acquired as part of a business
combination).
Impairment charges for the year of
£2,288,000 (2022: £Nil) relate to Callmedia and have been
recognised within exceptional items (Note 12).
Software and product platform
include capitalised development costs, being internally generated
assets. Other intangible assets include stock management platforms
which are managed by third parties.
Goodwill
The carrying value of goodwill is
allocated to the cash generating units as follows:
|
|
|
2023
|
2022
|
|
|
|
£000
|
£000
|
|
|
|
|
|
|
|
Network
services division
|
21,134
|
21,134
|
|
|
Managed
service and technology division
|
15,758
|
15,758
|
|
|
Mobile
division
|
3,307
|
3,307
|
|
|
|
________
|
________
|
|
|
|
|
|
|
|
Total
carrying value of goodwill
|
40,199
|
40,199
|
|
|
|
________
|
________
|
For the purposes of the impairment
review of goodwill, the net present value of the projected future
cash flows of the relevant cash generating unit are compared with
the carrying value of the assets for that unit; where the
recoverable amount of the cash generating unit is less than the
carrying amount of the assets, an impairment loss is
recognised.
Projected cash flows are based on
a five-year horizon which use the approved plan and a pre-tax
discount rate of 14.92% (2022: 13.93%) is applied to the resultant
projected cash flows of each CGU.
Key assumptions used to calculate
the cash flows used in the impairment testing were as
follows:
Network services division: average
annual revenue growth rate 15.9% (2022: 7.6%), terminal growth rate
3.0% (2022: 2.0%), average gross margin 41.7% (2022:
42.6%).
Managed service and technology
division: average annual revenue growth rate 1.4% (2022: 3.9%),
terminal growth rate 3.0% (2022: terminal growth rate 2.0%),
average gross margin 25.7% (2022: 25.7%).
Mobile division: average annual
revenue growth rate 1.1% (2022: 1.9%), terminal growth rate 0.0%
(2022: 0.1%), average gross margin 47.9% (2022: 45.7%).
The Group's impairment assessment
at 31 December 2023 indicates that there is headroom for each
unit.
The discount rate is based on
conventional capital asset pricing model inputs and varies to
reflect the relative risk profiles of the relevant cash generating
units. Sensitivity analysis using reasonable variations in growth
rate assumptions shows no indication of impairment.
The Company owns investments in
subsidiaries including a number which did not trade during the
year. The principal subsidiary undertaking at the end of the year
was:
Maintel Europe Limited
Maintel Europe Limited provides
goods and services in the managed services and technology and
network services sectors. Maintel Europe Limited is the sole
provider of the Group's mobile services.
In addition, the following
subsidiaries of the Company were dormant as at 31 December 2023 and
had been placed under members' voluntary liquidation during the
year:
|
Maintel International
Limited
|
Datapoint Global Services
Limited
|
|
Maintel Voice and Data
Limited
|
Maintel Network Solutions
Limited
|
|
Maintel Finance Limited
District Holdings
Limited
|
Datapoint Customer Solutions
Limited
Maintel Mobile Limited
|
|
Intrinsic Technology
Limited
|
Azzurri Communications
Limited
|
|
Warden Holdco Limited
|
Warden Midco Limited
|
Each subsidiary company is wholly
owned and, other than Maintel International Limited, is
incorporated in England and Wales. Maintel International Limited is
incorporated in the Republic of Ireland.
The registered address of Maintel
Europe Limited is the same as that of the parent. The registered
address of each other subsidiary, other than Maintel International
Limited, is Teneo Financial Advisory Limited, The Colmore Building,
20 Colmore Circus Queensway, Birmingham, B4 6AT. The registered
address of Maintel International Limited is Teneo, 3rd Floor, 20 on
Hatch, Hatch Street Lower, Dublin 2, Ireland.
15
|
Property, plant and
equipment
|
|
|
|
|
|
|
Leasehold
improvements
|
Office and computer
equipment
|
Motor
vehicles
|
Total
|
|
|
|
£000
|
£000
|
£000
|
£000
|
|
|
|
|
|
|
|
|
|
Cost
|
|
|
|
|
|
|
|
At 1
January 2022
|
|
832
|
7,776
|
47
|
8,655
|
|
|
Additions
|
|
6
|
926
|
-
|
932
|
|
|
Disposals
|
|
(325)
|
(6,589)
|
(47)
|
(6,961)
|
|
|
|
|
________
|
________
|
________
|
________
|
|
|
|
|
|
|
|
|
|
|
At 31
December 2022
|
|
513
|
2,113
|
-
|
2,626
|
|
|
Additions
|
|
-
|
418
|
-
|
418
|
|
|
|
|
________
|
________
|
________
|
________
|
|
|
|
|
|
|
|
|
|
|
At 31 December
2023
|
|
513
|
2,531
|
-
|
3,044
|
|
|
|
|
________
|
________
|
________
|
________
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
impairment
|
|
|
|
|
|
|
|
At 1
January 2022
|
|
593
|
6,924
|
47
|
7,564
|
|
|
Depreciation in the year
|
|
57
|
585
|
-
|
642
|
|
|
Disposals
|
|
(325)
|
(6,589)
|
(47)
|
(6,961)
|
|
|
|
|
________
|
________
|
________
|
________
|
|
|
|
|
|
|
|
|
|
|
At 31
December 2022
|
|
325
|
920
|
-
|
1,245
|
|
|
Depreciation in the year
|
|
57
|
580
|
-
|
637
|
|
|
Impairment in the year
|
|
53
|
-
|
-
|
53
|
|
|
|
|
________
|
________
|
________
|
________
|
|
|
At 31 December
2023
|
|
435
|
1,500
|
-
|
1,935
|
|
|
|
|
________
|
________
|
________
|
________
|
|
|
|
|
|
|
|
|
|
|
Net book
value
|
|
|
|
|
|
|
|
At 31 December
2023
|
|
78
|
1,031
|
-
|
1,109
|
|
|
|
|
________
|
________
|
________
|
________
|
|
|
|
|
|
|
|
|
|
|
At 31
December 2022
|
|
188
|
1,193
|
-
|
1,381
|
|
|
|
|
________
|
________
|
________
|
________
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
During the prior year, the Group
underwent a review of its fixed asset registers and disposed of
£325,000 Leasehold improvements, £6,589,000 Office and computer
equipment and £47,000 Motor vehicles, all included within Property,
plant and equipment. These assets had been fully depreciated and
were no longer in revenue-generating use by the prior year end. No
profit or loss on disposal was recognised on these
disposals.
Impairment charges for the year of
£53,000 (2022: £Nil) relate to onerous lease costs and have been
recognised within exceptional items (Note 12).
|
16
|
Right of use assets
|
|
|
|
|
|
Land and
buildings
|
Office and computer
equipment
|
Motor
vehicles
|
Total
|
|
|
|
£000
|
£000
|
£000
|
£000
|
|
|
Cost
|
|
|
|
|
|
|
|
At 1
January 2022
|
|
5,507
|
1,213
|
188
|
6,908
|
|
|
Additions
|
|
30
|
-
|
-
|
30
|
|
|
Disposals
|
|
(229)
|
(822)
|
(188)
|
(1,239)
|
|
|
|
|
________
|
________
|
________
|
________
|
|
|
|
|
|
|
|
|
|
|
At 31
December 2022
|
|
5,308
|
391
|
-
|
5,699
|
|
|
Additions
|
|
26
|
343
|
-
|
369
|
|
|
|
|
________
|
________
|
________
|
________
|
|
|
|
|
|
|
|
|
|
|
At 31 December
2023
|
|
5,334
|
734
|
-
|
6,068
|
|
|
|
|
________
|
________
|
________
|
________
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
impairment
|
|
|
|
|
|
|
|
At 1
January 2022
|
|
2,793
|
754
|
188
|
3,735
|
|
|
Depreciation charge for the year
|
|
656
|
284
|
-
|
940
|
|
|
Disposals
|
|
(229)
|
(822)
|
(188)
|
(1,239)
|
|
|
|
|
________
|
________
|
________
|
________
|
|
|
|
|
|
|
|
|
|
|
At 31
December 2022
|
|
3,220
|
216
|
-
|
3,436
|
|
|
Depreciation charge for the year
|
|
525
|
310
|
-
|
835
|
|
|
Impairment charge for the year
|
|
761
|
-
|
-
|
761
|
|
|
|
|
________
|
________
|
________
|
________
|
|
|
|
|
|
|
|
|
|
|
At 31 December
2023
|
|
4,506
|
526
|
-
|
5,032
|
|
|
|
|
________
|
________
|
________
|
________
|
|
|
Net book
value
|
|
|
|
|
|
|
|
At 31 December
2023
|
|
828
|
208
|
-
|
1,036
|
|
|
|
|
________
|
________
|
________
|
________
|
|
|
|
|
|
|
|
|
|
|
At 31
December 2022
|
|
2,088
|
175
|
-
|
2,263
|
|
|
|
|
________
|
________
|
________
|
________
|
During the prior year, the Group
underwent a review of its fixed asset registers and disposed of
£229,000 Buildings-related assets, £822,000 Office and computer
equipment and £188,000 Motor vehicles, all included within Right of
use assets. These assets had been fully depreciated and were no
longer in revenue-generating use by the prior year end. No profit
or loss on disposal was recognised on these disposals.
Impairment charges for the year of
£761,000 (2022: £Nil) relate to onerous lease costs and have been
recognised within exceptional items (Note 12).
|
17
|
Inventories
|
|
|
|
|
2023
|
2022
|
|
|
|
£000
|
£000
|
|
|
|
|
|
|
|
Maintenance stock
|
-
|
26
|
|
|
Stock
held for resale
|
1,677
|
2,568
|
|
|
|
________
|
________
|
|
|
|
|
|
|
|
Total
inventories
|
1,677
|
2,594
|
|
|
|
________
|
________
|
|
|
|
|
|
|
|
Cost of
inventories recognised as an expense
|
13,831
|
10,992
|
|
|
|
________
|
________
|
No provisions were made against
maintenance stock in 2023 (2022: £10,000). This is recognised in
cost of sales. No provisions were made against Stock held for
resale in 2023 or 2022 as this balance represents new hardware
awaiting installation at customer sites.
|
18
|
Trade and other
receivables
|
|
|
|
|
|
2023
|
2022
|
|
|
Current trade and other
receivables
|
£000
|
£000
|
|
|
|
|
|
|
|
Trade
receivables
|
12,336
|
12,975
|
|
|
Other
receivables
|
315
|
713
|
|
|
Prepayments and accrued income
|
12,757
|
13,688
|
|
|
|
________
|
________
|
|
|
|
|
|
|
|
Total
current trade and other receivables
|
25,408
|
27,376
|
|
|
|
________
|
________
|
All amounts shown above fall due
for payment within one year.
|
|
|
2023
|
2022
|
|
|
Non-current trade and other
receivables
|
£000
|
£000
|
|
|
|
|
|
|
|
Trade
receivables
|
-
|
90
|
|
|
|
________
|
________
|
|
|
|
|
|
|
|
Total
non-current trade and other receivables
|
-
|
90
|
|
|
|
________
|
________
|
In adopting IFRS 9, the Group
reviews the amount of credit loss associated with its trade
receivables and accrued income based on forward looking estimates
that take into account current and forecast credit conditions as
opposed to relying on past historical default rates. In adopting
IFRS 9, the Group has applied the Simplified Approach applying a
provision matrix based on number of days past due to measure
lifetime expected credit losses, after taking into account customer
sectors with different credit risk profiles, and current and
forecast trading conditions.
Movements in contract assets and
liabilities were as follows:
-
Accrued income decreased from £1.9m in 2022 to
£1.3m at the reporting date;
-
Prepayments decreased from £11.9m in 2022 to
£11.5m at the reporting date;
-
Deferred income increased from £20.1m in 2022 to
£21.9m at the reporting date; and
-
Deferred costs net of accrued costs decreased
from £9.6m in 2022 to £9.3m at the reporting date.
|
18
|
Trade and other
receivables (continued)
|
|
|
The corresponding adjustments for
these movements represent revenues and costs recognised in the
income statement in the year, driven by an increase in recurring
revenues and associated level of advance billings, combined with
the discharging of technology inventories used in the delivery of
projects.
|
19
|
Trade and other
payables
|
|
|
|
|
|
2023
|
2022
|
|
|
Current trade and other
payables
|
£000
|
£000
|
|
|
|
|
|
|
|
Trade
payables
|
12,761
|
18,631
|
|
|
Other tax
and social security
|
2,351
|
2,227
|
|
|
Other
payables
|
3,521
|
2,823
|
|
|
Accruals
|
3,439
|
3,169
|
|
|
Deferred
income
|
21,866
|
20,135
|
|
|
Derivative financial instruments (Note 23)
|
-
|
130
|
|
|
|
________
|
________
|
|
|
|
|
|
|
|
Total
current trade and other payables
|
43,938
|
47,115
|
|
|
|
________
|
________
|
|
|
|
|
|
The £5.9m decrease in Trade
payables in the year is predominantly due to prior year delays in
receiving certain materials from suppliers which were required for
customer installations, in particular switches. The Group has
agreements with suppliers to delay payment until the materials are
delivered and installed. These delays have significantly reduced
during the current year.
|
|
|
2023
|
2022
|
|
|
Non-current other
payables
|
£000
|
£000
|
|
|
|
|
|
|
|
Intangible licences and other payables
|
298
|
118
|
|
|
Advanced
mobile commissions
|
61
|
58
|
|
|
Other
payables
|
143
|
194
|
|
|
|
________
|
________
|
|
|
|
|
|
|
|
Total
non-current trade and other payables
|
502
|
370
|
|
|
|
________
|
________
|
|
|
|
Property,
|
|
|
|
|
|
|
|
plant and
|
Intangible
|
Tax
|
|
|
|
|
|
equipment
|
assets
|
losses
|
Other
|
Total
|
|
|
|
£000
|
£000
|
£000
|
£000
|
£000
|
|
|
Net
(asset)/liability at 1 January 2022
|
(1,276)
|
2,930
|
-
|
(96)
|
1,558
|
|
|
Charge/(credit) to consolidated statement of comprehensive
income
|
370
|
(569)
|
(675)
|
(21)
|
(895)
|
|
|
Adjustment to prior year to consolidated statement of
comprehensive income
|
(25)
|
280
|
-
|
40
|
295
|
|
|
|
|
|
|
|
|
|
|
|
________
|
________
|
________
|
________
|
________
|
|
|
Net
(asset)/liability at 31 December 2022
|
(931)
|
2,641
|
(675)
|
(77)
|
958
|
|
|
Charge/(credit) to consolidated statement of comprehensive
income
|
169
|
(787)
|
(587)
|
(178)
|
(1,383)
|
|
|
Adjustment to prior year to consolidated statement of
comprehensive income
|
-
|
-
|
(33)
|
(13)
|
(46)
|
|
|
|
________
|
________
|
________
|
________
|
________
|
|
|
Net
(asset)/liability at 31 December 2023
|
(762)
|
1,854
|
(1,295)
|
(268)
|
(471)
|
|
|
|
________
|
________
|
________
|
________
|
________
|
The net deferred tax asset mainly
arises on the recognition of tax timing differences on property,
plant and equipment, as well as prior and current year taxable
losses which are expected to be utilised against future year
taxable profits. Other items include timing differences in relation
to provisions. This is partially offset by a deferred tax liability
which mainly arises on the recognition of an intangible asset in
relation to the Maintel Mobile, Datapoint, Proximity, Azzurri,
Intrinsic and Atos acquisitions.
The Board has reviewed the Group
forecasts and projection models covering three years from the year
end, taking into account reasonably possible changes in trading
performance. As a result, the Board determined that the Group will
make sufficient profits in the future against which the losses can
be utilised. There are no time restrictions on when these taxable
losses can be utilised. The deferred tax asset relating to tax
losses has therefore been recognised on this basis.
The net deferred tax asset balance
at 31 December 2023 has been calculated on the basis that the
associated assets and liabilities will unwind at 25% (2022:
25%).
|
21
|
Borrowings
|
|
|
|
|
|
2023
|
2022
|
|
|
|
£000
|
£000
|
|
|
|
|
|
|
|
Current
bank loan - secured
|
2,322
|
22,726
|
|
|
Non-current bank loan - secured
|
20,579
|
-
|
|
|
|
________
|
________
|
|
|
|
|
|
|
|
Total
borrowings
|
22,901
|
22,726
|
|
|
|
________
|
________
|
The facility with HSBC Bank plc
("HSBC") consisting of a revolving credit facility ("RCF") of £20m
with a £6m term loan on a reducing basis, remained in place during
the year and has been extended to 30 September 2025 in March
2024.
The term loan is being repaid in
equal monthly instalments, starting in October 2022.
The year-end principal balance of
the term loan was £3.0m (2022: £5.4m) and of the RCF was £20.0m
(2022: £17.5m).
The key covenants include net
leverage ratio and interest cover tests, assessed on a quarterly
basis. During 2023, the Company successfully met the temporary
milestones and HSBC being satisfied that the recovery phase had
been successfully completed, the initial covenants of the loan were
reinstated in early 2024. As a consequence, the debt has been
classified to long term liabilities at 31 December 2023, whilst the
debt had been reclassified as current liabilities at 31 December
2022.
Interest on the borrowings is the
aggregate of the applicable margin and SONIA for Pound Sterling /
SOFR for US Dollar / EURIBOR for Euros.
The current bank borrowings above
are stated net of unamortised issue costs of debt of £0.1m (2022:
£0.2m).
The facilities are secured by a
fixed and floating charge over the assets of the Company and its
subsidiaries. Interest is payable on amounts drawn on the revolving
credit facility and loan facility at a covenant-depending tiered
rate of 2.60% to 3.25% per annum over SONIA, with a reduced rate
payable on the undrawn facility.
The Directors consider that there
is no material difference between the book value and fair value of
the loan.
|
|
2023
|
2022
|
|
|
£000
|
£000
|
|
|
|
|
|
Maturity analysis - contractual
undiscounted cash flows
|
|
|
|
|
In one year or less
|
958
|
872
|
|
|
Between one and five
years
|
698
|
1,389
|
|
|
In five years or more
|
74
|
145
|
|
|
|
________
|
________
|
|
|
Total undiscounted lease liabilities
at 31 December 2023
|
1,730
|
2,406
|
|
|
|
________
|
________
|
|
|
|
|
|
|
|
Discounted lease liabilities included in the statement
of
financial position
|
|
|
|
|
Current
|
909
|
820
|
|
|
Non-current
|
731
|
1,452
|
|
|
|
________
|
________
|
|
|
Total lease liabilities included in
the statement of financial position
|
1,640
|
2,272
|
|
|
|
________
|
________
|
|
|
|
|
|
|
|
Amounts recognised in the comprehensive income
statement
|
|
|
|
|
Interest expense on lease
liabilities
|
73
|
97
|
|
Expenses relating to short term
leases
|
1
|
89
|
|
|
________
|
________
|
|
|
|
|
|
Amounts recognised in the
statement of cash flows
|
|
|
|
Total cash outflow (including
payments relating to short term leases)
|
1,049
|
1,071
|
|
|
________
|
________
|
|
|
|
|
Lease liabilities predominantly
relate to the Company office premises in London, Blackburn and
Cannock and Office and computer equipment. During the years ended
31 December 2023 and 31 December 2022 there were no variable lease
payments to be included in the measurement of lease liabilities and
there were no sale and leaseback transactions. Income from
subleasing right of use assets in the year was £Nil (2022:
£Nil).
The Group's financial assets and
liabilities mainly comprise cash, borrowings, trade and other
receivables, trade and other payables, lease liabilities and
derivative financial instruments. The carrying value of all
financial assets and liabilities equals fair value given their
short-term nature.
|
|
|
Financial assets measured at
amortised cost
|
|
|
|
2023
|
2022
|
|
|
|
£000
|
£000
|
|
|
Non-current financial
assets
|
|
|
|
|
Trade
receivables
|
-
|
90
|
|
|
|
________
|
________
|
|
|
|
|
|
|
|
Total
|
-
|
90
|
|
|
|
________
|
________
|
|
|
|
|
|
|
|
Current financial
assets
|
|
|
|
|
Trade
receivables
|
12,336
|
12,975
|
|
|
Accrued
income
|
1,307
|
1,920
|
|
|
Other
receivables
|
315
|
713
|
|
|
|
________
|
________
|
|
|
|
|
|
|
|
Total
|
13,958
|
15,608
|
|
|
|
________
|
________
|
|
|
|
|
|
|
|
|
Financial
liabilities
measured at amortised
cost
|
|
|
|
2023
|
2022
|
|
|
|
£000
|
£000
|
|
|
Non-current financial
liabilities
|
|
|
|
|
Other
payables
|
502
|
370
|
|
|
Lease
liabilities
|
731
|
1,452
|
|
|
Borrowings
|
20,579
|
-
|
|
|
|
________
|
________
|
|
|
|
|
|
|
|
Total
|
21,812
|
1,822
|
|
|
|
________
|
________
|
|
|
|
|
|
|
|
Current financial
liabilities
|
|
|
|
|
Trade
payables
|
12,761
|
18,631
|
|
|
Borrowings
|
2,322
|
22,726
|
|
|
Other
payables
|
3,521
|
2,823
|
|
|
Accruals
|
3,439
|
3,169
|
|
|
Lease
liabilities
|
909
|
820
|
|
|
|
________
|
________
|
|
|
|
|
|
|
|
Total
|
22,952
|
48,169
|
|
|
|
________
|
________
|
|
|
|
|
|
|
|
|
Financial
liabilities
measured at fair
value
|
|
|
|
2023
|
2022
|
|
|
|
£000
|
£000
|
|
|
Current financial
liabilities
|
|
|
|
|
Derivative financial instruments
|
-
|
130
|
|
|
|
________
|
________
|
|
|
|
|
|
|
|
Total
|
-
|
130
|
|
|
|
________
|
________
|
|
|
|
|
|
Derivative financial instruments
held under current financial liabilities on the consolidated
statement of financial position at 31 December 2022 reflect the
negative change in fair value of US Dollar foreign exchange
contracts. These foreign exchange contracts are not designated in
hedge relationships, but are, nevertheless, intended to reduce the
level of foreign currency risk for expected sales and purchases.
Please refer to the Foreign
currency risk section for further information.
The Group held the following
foreign currency denominated financial assets and financial
liabilities:
|
|
|
Assets
|
Liabilities
|
|
|
|
2023
|
2022
|
2023
|
2022
|
|
|
|
£000
|
£000
|
£000
|
£000
|
|
|
|
|
|
|
|
|
|
US
Dollars
|
210
|
327
|
71
|
3,965
|
|
|
Euros
|
350
|
526
|
122
|
43
|
|
|
|
________
|
________
|
________
|
________
|
|
|
|
|
|
|
|
|
|
Total
|
560
|
853
|
193
|
4,008
|
|
|
|
________
|
________
|
________
|
________
|
The maximum credit risk for each
of the above is the carrying value stated above. The main risks
arising from the Group's operations are credit risk, currency risk
and interest rate risk, however other risks are also considered
below.
Credit risk
Management has a credit policy in
place and the exposure to credit risk is monitored on an ongoing
basis. Credit evaluations are performed on customers as deemed
necessary based on, inter alia, the nature of the prospect and size
of order. The Group does not require collateral in respect of
financial assets.
At the reporting date, the largest
exposure was represented by the carrying value of trade and other
receivables, against which £194,000 is provided at 31 December 2023
(2022: £389,000). The provision represents an estimate of potential
bad debt in respect of the year-end trade receivables, a review
having been undertaken of each such year-end receivable. The
largest individual receivable included in trade and other
receivables at 31 December 2023 owed to the Group was £1.0m
including VAT (2022: £0.7m). The Group's customers are spread
across a broad range of sectors and consequently it is not
otherwise exposed to significant concentrations of credit risk on
its trade receivables.
'The movement on the provision for
trade receivables is as follows:
|
|
|
2023
|
2022
|
|
|
|
£000
|
£000
|
|
|
|
|
|
|
|
Provision
at start of year
|
389
|
420
|
|
|
Provision
created
|
43
|
103
|
|
|
Provision
reversed
|
(238)
|
(134)
|
|
|
|
________
|
________
|
|
|
|
|
|
|
|
Provision
at end of year
|
194
|
389
|
|
|
|
________
|
________
|
A debt is considered to be bad
when it is deemed irrecoverable, for example when the debtor goes
into liquidation, or when a credit or partial credit is issued to
the customer for goodwill or commercial reasons.
The Group has applied the Simplified
Approach applying a provision matrix based on number of days past
due to measure lifetime expected credit losses and after taking
into account customer sectors with different credit risk profiles
and current and forecast trading conditions. The Group's provision
matrix is as follows:
|
|
|
Current
|
< 30
days
|
31-60 days
|
> 60
days
|
Total
|
|
31 December 2023
|
|
|
|
|
|
|
|
Expected
credit loss % range
|
0%-1%
|
2%-5%
|
3%-10%
|
10%-100%
|
|
|
|
Gross
debtors (£'000)
|
10,630
|
691
|
800
|
409
|
12,530
|
|
|
Expected
credit loss rate (£'000)
|
(37)
|
(19)
|
(26)
|
(112)
|
(194)
|
|
|
Accrued
income
|
1,307
|
|
|
|
1,307
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,643
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
< 30
days
|
31-60 days
|
> 60
days
|
Total
|
|
|
|
|
|
|
|
|
31 December 2022
|
|
|
|
|
|
|
|
Expected
credit loss % range
|
0%-1%
|
2%-5%
|
3%-10%
|
10%-100%
|
|
|
|
Gross
debtors (£'000)
|
11,004
|
931
|
289
|
1,262
|
13,486
|
|
|
Expected
credit loss rate (£'000)
|
(40)
|
(30)
|
(11)
|
(308)
|
(389)
|
|
|
Accrued
income
|
1,920
|
-
|
-
|
-
|
1,920
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,017
|
|
|
|
|
|
|
|
|
Receivables are grouped based on
the credit terms offered. The probability of default is determined
at the year-end based on the aging of the receivables and
historical data about default rates on the same basis. That
data is adjusted if the Group determines that historical data is
not reflective of expected future conditions due to changes in the
nature of its customers and how they are affected by external
factors such as economic and market conditions.
Foreign currency risk
The functional currency of all
Group companies at 31 December 2023 is Pound Sterling.
In addition, some Group companies
transact with certain customers and suppliers in Euros or US
Dollars. Those transactions are affected by exchange rate movements
during the year. Such transactions in Euros are not deemed material
in a Group context and sensitivity to Euro exchange rate movements
is considered to be immaterial.
Starting from the year ended 31
December 2022, the Group uses foreign exchange contracts to manage
some of its foreign currency risk exposures for US Dollar
transactions, in particular purchases. The US Dollar foreign
exchange contracts are not designated as cashflow hedges and are
entered into for periods consistent with foreign currency exposure
of the underlying transactions, generally from 3 to 6
months.
The Group held no foreign exchange
contracts as at 31 December 2023.
The Group was holding the
following foreign exchange contracts at 31 December
2022:
|
|
|
Maturity
|
|
|
|
Less than 1
month
|
1 to 3
months
|
3 to 6
months
|
6 to 9
months
|
9 to 12
months
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
exchange contracts
|
|
|
|
|
|
|
|
|
Contract amount (in $000)
|
-
|
2,500
|
2,000
|
-
|
-
|
4,500
|
|
|
Average contract rate (USD/GBP)
|
-
|
1.1685
|
1.1917
|
-
|
-
|
1.180
|
|
|
|
|
|
|
|
|
|
The carrying value of these
foreign exchange contracts held under current
financial liabilities on the Consolidated statement of financial
position at 31 December 2022 represents the negative change in
their fair value.
In the prior year, the Group
entered into derivative financial instruments principally with
financial institutions with investment grade credit ratings.
Foreign exchange contracts are held at fair value using techniques
which employ the use of 'Level 2' market observable inputs. The key
inputs used in valuing the derivatives are the exchange rates at
yearend between Pound Sterling and US Dollar. Market values have
been used to determine fair value and have been obtained from an
independent third party. The fair values of all other financial
instruments are measured using Level 1 inputs.
If the USD/GBP rates had been 0.5%
higher/lower during 2022, and all other variables were held
constant, the Group's profit/loss for the year would have been
£18,000 lower/higher due to the positive/negative change in fair
value of foreign exchange contracts.
Interest rate risk
The Group had total borrowings of
£22.9m at 31 December 2023 (2022: £22.7m). The interest rate
charged is related to SONIA and bank rate respectively and will
therefore change as those rates change. If interest rates had been
0.5% higher/lower during the year, and all other variables were
held constant, the Group's loss (2022: loss) for the year would
have been £121,000 (2022: £86,000) higher/lower due to the variable
interest element on the loan.
Liquidity risk
Liquidity risk represents the risk
that the Group will not be able to meet its financial obligations
as they fall due. This risk is managed by balancing the Group's
cash balances, banking facilities and reserve borrowing facilities
in the light of projected operational and strategic
requirements.
The following table details the
contractual maturity of financial liabilities based on the dates
the liabilities are due to be settled:
Financial liabilities:
|
|
0 to 6
months
|
6 to 12
months
|
2 to 5
Years
|
More than 5
years
|
Total
|
|
£000
|
£000
|
£000
|
£000
|
£000
|
|
|
|
|
|
|
|
|
Trade payables
|
12,761
|
-
|
-
|
-
|
12,761
|
|
Other payables
|
2,319
|
1,202
|
502
|
-
|
4,023
|
|
Lease liabilities
|
511
|
447
|
772
|
-
|
1,730
|
|
Accruals
|
3,439
|
-
|
-
|
-
|
3,439
|
|
Borrowings (including future interest)
|
2,218
|
2,144
|
21,853
|
-
|
26,215
|
|
|
______
|
______
|
______
|
______
|
______
|
|
|
|
|
|
|
|
|
At 31 December 2023
|
21,248
|
3,793
|
23,127
|
-
|
48,168
|
|
|
______
|
_______
|
_______
|
______
|
_______
|
|
|
0 to 6
months
|
6 to 12
months
|
2 to 5
Years
|
More than 5
years
|
Total
|
|
£000
|
£000
|
£000
|
£000
|
£000
|
|
|
|
|
|
|
|
|
Trade payables
|
18,631
|
-
|
-
|
-
|
18,631
|
|
Other payables
|
2,414
|
409
|
370
|
-
|
3,193
|
|
Lease liabilities
|
435
|
437
|
1,534
|
-
|
2,406
|
|
Accruals
|
3,169
|
-
|
-
|
-
|
3,169
|
|
Borrowings (including future
interest)[1]
|
892
|
23,765
|
-
|
-
|
24,657
|
|
Derivative financial
instruments
|
130
|
-
|
-
|
-
|
130
|
|
|
______
|
______
|
______
|
______
|
______
|
|
|
|
|
|
|
|
|
At 31 December 2022
|
25,671
|
24,611
|
1,904
|
-
|
52,186
|
|
|
______
|
_______
|
_______
|
______
|
_______
|
[1] HSBC granted a waiver on the
covenants over the Group's borrowings at 31 December 2022 after the
prior reporting period had ended. Therefore, the total borrowings
at 31 December 2022 have been classified as current liabilities and
the above maturity analysis has been presented on this basis.
Please see Note 21 for further information on the Group's
borrowings.
Market risk
As noted above, the interest
payable on borrowings is dependent on the prevailing rates of
interest from time to time.
Capital risk management
The Group's objective when
managing capital is to safeguard its ability to continue as a going
concern in order to provide returns to shareholders. Capital
comprises all components of equity, including share capital,
capital redemption reserve, share premium, translation reserve and
retained losses. Typically returns to shareholders will be funded
from retained profits, however in order to take advantage of the
opportunities available to it from time to time, the Group will
consider the appropriateness of issuing shares, repurchasing
shares, amending its dividend policy and borrowing, as is deemed
appropriate in the light of such opportunities and changing
economic circumstances.
|
24
|
Share
capital
|
|
|
|
|
Allotted, called up and
fully paid
|
|
|
|
2023
|
2022
|
2023
|
2022
|
|
|
|
Number
|
Number
|
£000
|
£000
|
|
|
|
|
|
|
|
|
|
Ordinary
shares of 1p each
|
14,361,492
|
14,361,492
|
144
|
144
|
|
|
|
_________
|
_________
|
_________
|
_________
|
|
|
|
|
|
|
| |
The Company adopted new Articles
on 27 April 2016, which dispensed with the need for the Company to
have an authorised share capital. The Company has one class of
ordinary shares which carry no right to fixed income. All of the
Company's shares in issue are fully paid and each share carries the
right to vote at general meetings.
No shares were issued in the year
(2022: Nil).
No shares were repurchased during
the year (2022: Nil).
Share premium, translation
reserve, and retained losses represent balances conventionally
attributed to those descriptions. Other reserves include a capital
redemption reserve of £31,000 (2022: £31,000) and a translation
reserve of £33,000 (2022: £49,000).
The capital redemption reserve
represents the nominal value of ordinary shares repurchased and
cancelled by the Company and is non-distributable in normal
circumstances.
The Group has no regulatory
capital or similar requirements, its primary capital management
focus is on maximising earnings per share and therefore shareholder
return.
The Directors have proposed that
there will be no final dividend in respect of 2023 (2022:
£Nil).
The Company established the
Maintel Holdings Plc Share Incentive Plan ("SIP") in 2006, which
was updated in 2016. The SIP is open to all employees and Executive
Directors with at least six months' continuous service with a Group
company and allows them to subscribe for existing shares in the
Company out of their gross salary. The shares are bought by the SIP
on the open market. The employees and Directors own the shares from
the date of purchase but must continue to be employed by a Group
company and hold their shares within the SIP for five years to
benefit from the full tax benefits of the plan.
The Remuneration Committee's
report, included in the annual report, describes the options
granted over the Company's ordinary shares to the
Directors.
In aggregate, options are
outstanding over 5.8% (2022: 6.6%) of the current issued share
capital. The number of shares under option and the vesting and
exercise prices may be adjusted at the discretion of the
Remuneration Committee in the event of a variation in the issued
share capital of the Company.
|
|
2023
|
2023
|
2022
|
2022
|
|
|
Number of
|
Weighted
|
Number of
|
Weighted
|
|
|
Options
|
Average
|
Options
|
Average
|
|
|
|
Exercise
price
|
|
Exercise
price
|
|
|
|
|
|
|
|
Outstanding at 1 January
|
947,279
|
348.61p
|
314,409
|
383.40p
|
|
Granted
during the year
|
575,000
|
120.22p
|
637,870
|
331.31p
|
|
Lapsed
during the year
|
(695,245)
|
354.08p
|
(5,000)
|
330.00p
|
|
|
_______
|
_______
|
_______
|
_______
|
|
|
|
|
|
|
|
Outstanding at 31 December
|
827,034
|
185.21p
|
947,279
|
348.61p
|
|
|
_______
|
_______
|
_______
|
_______
|
|
|
|
|
|
|
|
Exercisable at year-end
|
-
|
-
|
126,409
|
469.23p
|
|
|
|
|
|
|
The weighted average contractual
life of the outstanding options was 8 years (2022: 4 years),
exercisable in the range 115p to 375p (2022: 221p to
880p).
No share options were exercised in
the year by way of issue of new shares (2022: none).
|
|
Outstanding share options
by exercisable price range
|
2023
|
2022
|
|
|
|
Number of
|
Number of
|
|
|
|
Share
options
|
Share
options
|
|
|
Exercisable Price range
|
|
|
|
|
115p to
175p
|
575,000
|
-
|
|
|
221p to
274p
|
-
|
65,000
|
|
|
330p to
375p
|
252,034
|
755,870
|
|
|
430p to
505p
|
-
|
113,000
|
|
|
675p to
880p
|
-
|
13,409
|
|
|
|
_______
|
_______
|
|
|
|
|
|
|
|
Total
share options outstanding
|
827,034
|
947,279
|
|
|
|
_______
|
_______
|
|
|
|
|
|
The Group recognised £189,000 of
expenditure related to equity-settled share-based payments in the
year (2022: £181,000).
The fair value of options granted
during the year is determined by applying the Black-Scholes
model.
The expense is apportioned over
the vesting period of the option and is based on the number which
are expected to vest and the fair value of these options at the
date of grant.
The inputs into the Black-Scholes
model in respect of options granted in the period are as
follows:
|
|
Date of
grant
|
|
28 April
2023
|
11
August 2023
|
|
|
Number of
options granted
|
|
525,000
|
50,000
|
|
|
Share
price at date of grant
|
|
115.00p
|
175.00p
|
|
|
Exercise
price
|
|
115.00p
|
175.00p
|
|
|
Option
life in years
|
|
10
|
10
|
|
|
Expiry
date
|
|
28 April
2033
|
11
August 2033
|
|
|
Vesting
period
|
|
3
years
|
3
years
|
|
|
Risk-free
rate
|
|
3.72%
|
4.53%
|
|
|
Expected
volatility
|
|
40.26%
|
41.02%
|
|
|
Expected
dividend yield
|
|
0%
|
0%
|
|
|
Fair
value of options
|
|
0.360p
|
0.882p
|
|
|
|
|
|
|
Expected volatility was determined
by calculating the historical volatility of the Group's share price
for the five-year period prior to the date of grant of the share
option. The expected life used in the model is based on
management's best estimate. The Group did not enter into any
share-based payment transactions with parties other than employees
during the current or previous period.
|
28
|
Related party transactions
|
Transactions with key management personnel
Key management personnel comprise
the Directors and executive officers. The remuneration of the
individual Directors is disclosed in the Remuneration Committee
report. The remuneration of the Directors and other key members of
management during the year was as follows:
|
|
|
2023
|
2022
|
|
|
|
£000
|
£000
|
|
|
|
|
|
|
|
Short
term employment benefits
|
1,952
|
1,605
|
|
|
Social
security costs
|
241
|
206
|
|
|
Contributions to defined contribution pension
schemes
|
49
|
41
|
|
|
|
________
|
________
|
|
|
|
2,242
|
1,852
|
|
|
|
________
|
________
|
Other transactions - Group
During the year, the Group paid
fees of £Nil (2022: £83,483) to AAA Rated Limited, a company of
which C Thompson is a shareholder and Director, in respect of
consultancy fees provided for the refinancing of the Group. No
amounts were outstanding at 31 December 2023 (2022:
£Nil).
|
29
|
Post balance sheet events
|
The facility with HSBC Bank plc
consisting of a revolving credit facility of £20m with a £6m term
loan on a reducing basis, remained in place during the year and has
been extended to 30 September 2025 in March 2024.
There are no other events
subsequent to the reporting date which would have a material impact
on the financial statements.
|
30
|
Contingent liabilities
|
As security on the Group's loan
and overdraft facilities, the Company has entered into a cross
guarantee with its subsidiary undertakings in favour of HSBC Bank
plc. At 31 December 2023 each subsidiary undertaking had a positive
cash balance.
The Company has entered into an
agreement with Maintel Europe Limited, guaranteeing the performance
by Maintel Europe Limited of its obligations under the lease on its
London premises.
