TIDMMAI
RNS Number : 7487C
Maintel Holdings PLC
11 March 2011
Maintel Holdings Plc
Preliminary results for the year to 31 December 2010
Maintel Holdings Plc, the telecoms services company, announces
preliminary results for the year to 31 December 2010.
Financial highlights
Adjusted* earnings per share of 20.3p (2009: 17.7p); basic
earnings per share of 17.8p (2009: 15.7p)
Group revenue increase of 13% to GBP22.0m (2009: GBP19.4m), with
recurring revenue increasing by 9% to GBP17.5m (2009: GBP16.0m) to
be 79% of total 2010 revenue
Profit before tax up 12% at GBP2.673m (2009: GBP2.382m)
Adjusted* profit before tax up 14% at GBP3.046m (2009:
GBP2.675m)
Maintenance base GBP13.2m at year end (2009: GBP10.3m)
Equipment sales up by 32% at GBP4.7m (2009: GBP3.6m), including
a GBP622,000 contract
Sales of broadband, call traffic, line rental and related
products increased by 2% to GBP5.8m (2009: GBP5.7m) despite rate
pressures
Strong operating cash flow and year end cash balances of GBP2.5m
(2009: GBP2.5m), after the acquisition of the Redstone base for
GBP1.6m net cash, dividends of GBP1.2m (including a special
dividend in March 2010) and share buy backs costing GBP0.5m; the
Group has no debt
Final dividend proposed of 4.6p per share (2009 second interim
equivalent: 4.1p), making 8.5p for the year (2009: 10.1p, including
a special dividend of 2.9p)
*adjusted for goodwill impairment, intangibles amortisation and
non-trading accounting adjustments re the Redstone acquisition
Operational highlights
3 year partnership agreement signed with Westcon in June to
service its maintenance base, adding cGBP600,000 annualised
maintenance revenue, c1,400 customers and an important Avaya skill
base
Acquisition of business and assets from Redstone plc
subsidiaries in October, adding cGBP2m annualised maintenance base
and further Avaya and other resource
2 further significant orders received from the Group's main
customer, one in February and one in July
For further information please contact:
Eddie Buxton, Chief Executive 020 7401 4601
Dale Todd, Finance Director 020 7401 0562
FinnCap
Marc Young (Corporate Finance) 020 7600 1658
Tom Jenkins (Corporate Broking)
Chairman's statement
Maintel Holdings' revenues rose by 13% during 2010 to GBP22.0m
(2009 - GBP19.4m) and adjusted profit before tax by 14% to
GBP3.046m (2009 - GBP2.675m) giving an increase in adjusted
earnings per share of 15% to 20.3p (2009 - 17.7p).
Our maintenance base ended the year at a record GBP13.2m (2009 -
GBP10.3m) having grown by 28%, boosted by two substantial pieces of
new business from our largest customer, a new partnership with
Westcon which brought in GBP600,000 of annualised revenues and the
acquisition towards the end of the year of a GBP2m maintenance base
from Redstone which we believe will deliver significant incremental
earnings in the future. Equipment sales rebounded strongly from
2009 levels showing a 32% increase which included one very large
order at lower than average margin but a good spread of smaller
projects which fulfilled our margin targets. Network services
revenues increased only slightly during the year, with call rates
remaining highly competitive. However, line rental and data showed
promising returns and we continue to broaden our product offering
to access new revenue streams.
Aside from organic growth which continues to be a priority, we
remain vigilant for acquisitions that fulfil our valuation criteria
as industry consolidation continues apace. Equally we are always
pleased to work closely with a range of longstanding partners
including some of the biggest companies in our industry to whom we
supply complementary services and we expect further growth in this
area in the year ahead as various new relationships bear fruit.
The Company continues to be strongly cash generative. We
repurchased 295,000 shares during the year, equivalent to 3% of the
outstanding share capital, and following our acquisition in October
of the Redstone businesses for GBP1.6m net we ended the year with
cash balances of GBP2.5m and no debt. We are proposing a final
dividend of 4.6p payable on 28 April 2011 to shareholders on the
register at 25 March 2011.
It falls to me to thank on behalf of shareholders our loyal and
energetic staff for their work and commitment during the year and
to wish them well for the challenges and opportunities ahead.
J D S Booth
Chairman
10 March 2011
Business review
Results
As anticipated in the half-year statement, revenue and profit
improved further in the second half of the year, reflecting the
continued growth in the maintenance base and higher levels of
equipment sales derived from the base.
Adjusted profit before tax for the year was GBP3.046m, a 14%
increase on 2009, with unadjusted profit before tax increasing by
12% to GBP2.673m.
The Company repurchased 295,000 shares in the year (3% of the
year end share capital), mostly in Q3, and this, combined with the
increased profitability, has enhanced adjusted EPS by 15% from
17.7p in 2009 to 20.3p in 2010. Basic EPS increased by 13%, from
15.7p in 2009 to 17.8p in 2010.
H1 2010 H2 2010 2010 2009
GBP000 GBP000 GBP000 GBP000
Revenue 10,580 11,428 22,008 19,394
------- ------- ------ ------
Profit before tax 1,350 1,323 2,673 2,382
Add back goodwill
impairment and customer
relationship intangibles
amortisation 132 171 303 293
Add back non-trading
accounting adjustments
re Redstone acquisition - 70 70 -
------- ------- ------ ------
Adjusted profit before
tax 1,482 1,564 3,046 2,675
------- ------- ------ ------
Basic and diluted 9.0p 8.8p 17.8p 15.7p
earnings per share
------- ------- ------ ------
Adjusted basic and 9.8p 10.5p 20.3p 17.7p
diluted earnings per
share
-------------------------- ------- ------- ------ ------
Group revenues increased by GBP2.614m, or 13%, in the year. The
two major new contracts from the Group's largest customer noted in
the interim report were supplemented by 6 months' revenue from a
partnership agreement with Westcon and continuing higher levels of
equipment sales, including a large supply and installation contract
referred to at the half year.
Network services revenues increased marginally in the year, with
low attrition being matched by low new sales, the investment made
in the division during the year having been less effective than
anticipated.
At the end of June, the Group entered into a three year
partnership agreement with Westcon Convergence UK (the "Westcon
partnership") which effectively added approximately GBP600,000 of
annualised revenue and 1,400 customers to the maintenance base,
with Maintel being the preferred maintainer to any new customers
Westcon signs. Under the agreement, a team of Avaya engineers
joined Maintel from Westcon, significantly accelerating our
development of a product expertise which gained dramatically in
importance when Avaya acquired Nortel in 2009. While the cost of
the engineers means that the partnership adds more to our strategic
strength than our short term profitability, it provides instant
access to a new market at negligible risk or cost. A consequential
benefit has been the ability to bring in house some previously
outsourced Avaya contracts, reducing our third party support
costs.
In addition, the Group acquired certain business and assets from
Redstone Converged Solutions Limited and Marcom Communications
Limited (a Redstone subsidiary) (together the "Redstone
acquisition") at the end of October, for a net cash consideration
of GBP1.6m. Approximately GBP1.7m annualised of maintenance
contracts were acquired as part of the agreement, and Maintel also
agreed to supply certain customers of Redstone with maintenance
services for approximately GBP280,000 per annum. After
redundancies, a net 18 Redstone/Marcom employees were retained by
Maintel. Due to the acquired customers' billing cycles, the
Redstone acquisition is not expected to reach full cash generation
potential until Q3 2011. In 2010 it contributed, before redundancy
costs, an approximate GBP50,000 profit to Group results including
GBP105,000 of deferred income net of deferred costs for which no
cash flows will be received by the Group; assuming no significant
excess of attrition over new sales in the acquired base, the
acquisition should contribute progressively more to operating cash
flows during 2011 until peaking in Q3. A further GBP141,000 of
deferred income less deferred costs will be recognised in 2011. The
Group incurred GBP222,000 in redundancy costs in 2010 in respect of
the acquisition, GBP175,000 of which is covered by an indemnity
from Redstone. The GBP175,000 indemnity has been treated as a
deduction from consideration for the purposes of calculating
goodwill, and the GBP175,000 costs being expensed as incurred in
2010. The GBP175,000 indemnity, and the GBP105,000 deferred income
less costs adjustment noted above, have been added back in
calculating adjusted profit, as this represents a more accurate
picture of underlying trading.
Recurring revenue (maintenance and network services) increased
again in the year to GBP17.5m (79% of total revenues) (2009 -
GBP16.0m and 82%), providing good visibility of revenues
notwithstanding the effects of attrition.
Revenue analysis (GBP000) 2010 2009
---------------------------------- ------- -------
Maintenance related 11,678 10,289
---------------------------------- ------- -------
Equipment, installations and
other 4,713 3,572
---------------------------------- ------- -------
Total maintenance and equipment
division 16,391 13,861
---------------------------------- ------- -------
Network services division 5,816 5,703
---------------------------------- ------- -------
Intercompany (199) (170)
---------------------------------- ------- -------
Total Maintel Group 22,008 19,394
---------------------------------- ------- -------
Cash generated from operating activities continued to be strong,
at GBP4.117m, in 2010 (2009 - GBP2.917m). Cash balances were
GBP2.459m at the year end (2009 - GBP2.506m) after the GBP1.6m net
cash cost of acquiring the Redstone base, dividend payments of
GBP1.173m, GBP822,000 tax and the GBP487,000 cost of buying back
shares. The Group has no debt.
Divisional performance is described further below.
Maintenance and equipment division
The maintenance and equipment division provides maintenance,
service and support of office-based voice and data equipment across
the UK on a contracted basis. It also supplies and installs voice
and data equipment to maintenance customers.
The division's revenues increased by 18% in the year as shown in
the table above, maintenance related revenue growing by 13% and
equipment sales by 32%.
Maintenance
Maintenance revenues increased by GBP1.389m in the year, with
two significant orders from the Group's largest customer, one going
live in February and the other in July. Revenues also benefited
from the commencement of the Westcon partnership (initially around
GBP600,000 of annualised maintenance revenues) at the end of June
and the acquisition of the Redstone base (cGBP2m annualised
maintenance revenues) at the end of October, both of which are
contributing maintenance revenues in line with expectations. The
maintenance base stood at a record of more than GBP13m at the year
end.
As envisaged, we have received increasing levels of business
during the year from our relationships with larger integrators, and
further relationships continue to be forged, whilst at the other
end of the scale the direct sales team continues to sign up
traditional SME and larger customers, albeit at lower levels than
experienced historically, all of which helps provide a balance to
the base.
It was noted at the half year that attrition was running
slightly ahead of recent years, but this position reversed in H2,
so that the rate for the year was virtually identical to that of
2009.
Equipment sales
Following a drop in equipment sales revenue in 2009 attributed
to the economic environment, this has increased by GBP1.141m in the
year, despite a conscious and continuing policy to generally avoid
such sales if they do not meet margin criteria. GBP622,000 of the
increase, however, is attributable to a single project which was
low risk and at a lower than usual, but acceptable, margin and
which has led to a further GBP250,000 extension to that order in
2011. There were a number of medium-sized sales in the year, but a
large proportion of equipment sales is of low unit value and is a
function of the increased size of the maintenance base and which
could reasonably be deemed recurring revenue. Overall equipment
sales margin percentage was below budget due to the large contract,
but not significantly so.
The increase in the sales and customer service headcount shown
below has primarily arisen from the transfer to the Group of
Redstone employees and the enhancement of resource to maintain a
quality service to the increased customer base. The increase in
engineer headcount is in the main the result of the acquisition of
Avaya skills through the Westcon partnership and the Redstone
acquisition.
At 31 December
Headcount Average 2010 Average 2009 2010
----------------------------- ------------- ------------- ---------------
Sales and customer service* 49 44 56
----------------------------- ------------- ------------- ---------------
Engineers* 86 79 100
----------------------------- ------------- ------------- ---------------
* excluding redundant Redstone employees
2010 2009
-------------------------------- ------------ ------------
Division gross profit (GBP000) 6,496 (40%) 5,828 (42%)
-------------------------------- ------------ ------------
The division's gross profit margin dropped by 2 percentage
points in the year, the equipment sales at lower margin noted above
being the main contributory factor, although the division was also
affected by a full year's support charge from a manufacturer and by
the effects of some renegotiated customer contracts, in particular
the framework agreement with the Group's largest customer, although
this latter cost is also expected to result in improved contract
security and greater exposure to new business opportunities.
The percentage margin in the second half was also affected by
the Westcon partnership agreement and Redstone acquisitions, where
low levels of profitability were expected initially
post-completion, but will improve in 2011 as the negative effects
of deferred maintenance income not acquired unwind.
Net margin (operating profit as a percentage of revenue) from
the division fell from 16.0% in 2009 to 14.4%, in sympathy with
gross margin but partly due to the two Redstone accounting
adjustments (the inclusion of the GBP105,000 deferred income less
deferred costs, and the GBP175,000 redundancy cost) which increased
revenue and administration costs; excluding these adjustments, net
margin was 14.9%.
Given the application of common resource across both maintenance
and equipment sales, it is not practical to quote definitive margin
data on the separate business sectors; however management figures
are used to monitor results internally.
Network services division
The network services division sells a portfolio of services
which includes telephone line rental, inbound and outbound
telephone calls, data connectivity, Internet access and IP
telephony solutions. These services complement the services offered
by the maintenance and equipment division.
Revenue analysis (GBP000) 2010 2009
--------------------------- ------ ------
Call traffic 2,690 2,826
--------------------------- ------ ------
Line rental 2,282 2,048
--------------------------- ------ ------
Data services 594 538
--------------------------- ------ ------
Other 250 291
--------------------------- ------ ------
Total network services 5,816 5,703
--------------------------- ------ ------
2010 2009
-------------------------------- ------------ ------------
Division gross profit (GBP000) 1,545 (27%) 1,400 (25%)
-------------------------------- ------------ ------------
The division's revenue increased by GBP113,000 or 2% with the
switch from call traffic to line rental continuing the trend of the
last few years, and data services revenues increasing by a further
10% in the year.
The reduction in call traffic revenue is a consequence of
reduced fixed line traffic volumes generally, a continuing effect
of the economic environment impacting on call volumes, the effects
of cancellations by some medium-sized customers in late 2009 and H1
2010 and reduced call minute rates. The signing of a major line
rental customer in mid-2009 has helped contribute to the increase
in line rental revenues and BT's recently announced increase in its
line rental estate is an encouraging indicator for this revenue
stream.
2010 has also seen increasing uptake in the division's IP-based
telephony solutions including SIP trunking and hosted PBX
solutions, which is a trend that we expect to continue alongside
the more traditional services.
Although line rental revenues attract around half the margin of
call traffic, the entire revenue increase translated to margin
increase due to year on year improvements in call traffic and data
services margins, as a result of improved buy-in rates and the
continuing focus on improving processes and rationalising
suppliers.
Attrition in the division remained at its historically low
levels during the year, although this was balanced by a relatively
subdued level of new sales, partially reflecting our focus on good
margin, low risk prospects in the current economic environment.
Administrative expenses, excluding goodwill impairment and
intangibles amortisation
Administrative expenses (GBP000) 2010 2009
---------------------------------- ------ ------
Sales expenses 2,304 2,080
---------------------------------- ------ ------
Other administrative expenses
(excluding goodwill impairment,
intangibles amortisation and
GBP175,000 Redstone redundancy
charge in 2010) 2,456 2,356
---------------------------------- ------ ------
Redstone redundancy charge 175 -
---------------------------------- ------ ------
Total other administrative
expenses 4,935 4,436
---------------------------------- ------ ------
Sales expenses increased by GBP224,000 or 11% in the year, as a
senior sales person was recruited, certain Redstone employees were
retained and commissions were paid on increased revenues.
Administrative costs remain tightly controlled and rose by
GBP100,000 or 4% in the year, GBP28,000 being an increase in the
holiday pay accrual arising from the increased employee numbers,
and GBP26,000 being the costs of the Redstone acquisition.
Impairment and amortisation charges are discussed below.
The table below shows relevant headcount in relation to
revenue.
2010 2009
-------------------------------------- ------- -------
Average Group headcount during
the period* 165 153
-------------------------------------- ------- -------
Average sales and service headcount* 58 53
-------------------------------------- ------- -------
Average corporate and admin
headcount* 21 21
-------------------------------------- ------- -------
Group revenue (GBP000) 22,008 19,394
-------------------------------------- ------- -------
* excluding redundant Redstone employees
Interest
Net interest receivable increased from GBP12,000 to GBP29,000 in
2010, with average cash balances being higher in 2010 despite share
buybacks in September and the Redstone acquisition at the end of
October.
Taxation
The consolidated statement of comprehensive income shows a tax
rate of 28.6% (2009 - 28.8%). The two main trading companies are
taxed at 28.0% (2009 - 28.0%). Disallowables raise the effective
rate above this, as did an element of the goodwill impairment
charge in 2009 which did not attract tax relief.
Dividends
A second interim dividend for 2009 of 4.1p per share (GBP441,000
in total) was paid on 25 March 2010, together with a special
interim dividend for 2009 of 2.9p per share (GBP312,000), and an
interim dividend for 2010 of 3.9p (GBP420,000) was paid on 1
October 2010.
It is proposed to pay a final dividend of 4.6p in respect of
2010 on 28 April to shareholders on the register at the close of
business on 25 March. The corresponding ex-dividend date will be 23
March. In accordance with accounting standards, this dividend is
not accounted for in the financial statements for the period under
review as it had not been committed as at 31 December 2010.
Consolidated statement of financial position
The consolidated statement of financial position remains sound,
with GBP2.459m of cash and no debt, facilitating continued growth
from existing resources.
Trade receivables have increased by GBP459,000 over the year,
with higher levels of billing in Q4 2010 compared with Q4 2009,
including the effects of Westcon and Redstone billing. Trade
payables have increased by GBP399,000 largely due to the increase
in cost of sale relating to equipment sales. These factors, plus
the NI/PAYE effect of increased staff levels have resulted in an
increase in tax and social security liability at the year end
compared with the previous year.
The value of maintenance stock has increased by GBP17,000 in the
year, to GBP621,000, due to the acquisition of GBP95,000 of stock
from Redstone, net of regular provisioning being applied. As part
of the agreement signed with Westcon, the Group took ownership of
Avaya maintenance stock from Westcon which, not being material, has
been incorporated in the Group's maintenance stock at nil value.
The value of stock held for resale has increased from GBP114,000 to
GBP380,000 as a result of a higher number of installations spanning
the year end.
Deferred maintenance income has increased by GBP748,000, due to
the increase in the maintenance base over the year, including the
effects of the Westcon partnership and Redstone acquisition
including GBP141,000 in respect of the performance obligation
liability adjustment. Other deferred income has increased by
GBP204,000 mirroring the increase in stock arising from more
installation projects spanning the year end.
No significant expenditure has been required on plant and
equipment during the period, with additions broadly matching
depreciation, and the spend in the year weighted to improving IT
security and resiliency.
Intangible assets
The Group has four intangible assets - (i) goodwill relating to
the acquisition of Maintel Network Services Limited, (ii) an
intangible asset represented by customer contracts and
relationships acquired from District Holdings Limited, Callmaster
Limited and Redstone, (iii) goodwill relating to the District and
Redstone acquisitions, and (iv) a licence for billing software.
GBP128,000 was added to Goodwill during the year, in respect of
the Redstone acquisition. Goodwill is subject to an impairment test
at each reporting date. No impairment has been charged to the
consolidated statement of comprehensive income in 2010 (2009 -
GBP30,000), and the carrying value is GBP475,000 at 31 December
2010 (2009 - GBP347,000).
The intangible assets represented by purchased customer
contracts and relationships were supplemented by the addition of
contracts valued at GBP1.448m arising from the Redstone acquisition
during the year. The intangible assets are subject to an
amortisation charge of 17-20% of cost per annum in respect of
maintenance contract relationships and 14.2% per annum in respect
of network services contracts. GBP303,000 was amortised in 2010
(2009 - GBP263,000), leaving a carrying value of GBP1.713m (2009 -
GBP568,000).
The billing software is amortised over a three year period and
is subject to an annual impairment review. The amortisation charge
in the period was GBP32,000, leaving a carrying value of GBP43,000
(2009 - GBP75,000).
Purchase of own shares
Further to the authority granted at the last two AGMs, the
Company repurchased and cancelled 295,000 of its own shares during
2010, at prices between 140p and 165p each and a total cost of
GBP487,000.
The share price at 31 December 2010 was 250p.
Cash flow
At 31 December 2010 the Group had cash and bank balances of
GBP2.459m (2009 - GBP2.506m), all of it unrestricted. Cash
generated from operating activities in the year was GBP4.117m, out
of which GBP1.173m was paid in dividends, GBP487,000 on share buy
backs, GBP822,000 in corporation tax and a net GBP1.6m on the
Redstone acquisition.
The Group has no debt and invests its surplus cash with
mainstream banking organisations.
Principal risks
The directors consider that the principal risks to the Group
relate to technological advance, marketplace relationships and
pricing strategies, and the ongoing implications of the current
economic environment.
Telecommunications hardware has historically focused on a PBX
core, which is gradually being replaced, at least at the higher
end, by Voice over Internet Protocol (VoIP) capabilities.
Customers' acceptance of the new technologies moves at varying
rates, however, so that legacy systems will continue to be serviced
for some time to come. Maintel sells and maintains the replacement
breed of telephone system (IPPBX), and has had notable success with
the transition to date. Maintenance income from the new technology
can be reduced when compared to traditional telephony although
every effort is made to counter this effect through reduced costs
in delivering our service and by retaining the resultant enhanced
calls and lines revenue.
VoIP technology is a potential threat to the reselling of call
minutes with a particular type of customer. Recognising this
potential risk, the Group has expanded its product portfolio with,
for example, the launch of SIP trunking and hosted IP technology.
In addition line rental revenues have continued to grow
significantly during 2010. The development of VoIP is constantly
monitored so that the Group may take advantage of profitable
business models as and when they appear.
The Group is potentially subject to new pricing strategies by
both competitors and suppliers, whether due to their own internal
policies, in response to technological change or, in the case of
call minutes and line rentals, potential regulatory change. The
directors monitor margins closely and take action where
appropriate.
The Group has a symbiotic relationship with Cable & Wireless
Worldwide, such that Cable & Wireless Worldwide constitutes a
significant share of its maintenance base. Should this relationship
be terminated, the maintenance base would reduce to that extent
over time, necessitating a commensurate reduction in costs.
Partnerships with other integrators are being developed which have
begun to reduce the percentage weighting, with the Redstone
acquisition having the same effect by increasing the size of the
base.
The Group's maintenance contracts have a natural finite life,
and are subject to competitive attack, so that there is an
inevitable customer churn. The directors monitor the rate and
causes of churn and implement strategies with the objective of
minimising attrition and growing the customer base organically and
by way of acquisition if cost effective.
Outlook
While we see the 2011 economic environment remaining difficult
as the government's policy to reduce the structural deficit
continues to have an impact on company investment and cost
reduction activity, Maintel is well placed to continue its growth
in this environment, with the maintenance and equipment division
expected to advance on a number of fronts during 2011, including
the further development of partner business, the development of the
Westcon partnership and the Redstone base, and progression into the
Avaya marketplace capitalising on the investments in resource and
critical mass established during 2010.
The enhanced engineering skills gained from recent acquisitions,
especially in the areas of IP and data will allow Maintel to
accelerate its growth in these areas to supplement its traditional
maintenance revenues.
The network services division is expected to see slower growth
in the year, with the main focus being on the maintenance and
equipment division, although farming of the Westcon and Redstone
bases is expected to produce positive results.
The Group is therefore well positioned to make further progress
during the current year.
Eddie Buxton
Chief Executive
10 March 2011
Consolidated statement of comprehensive income
for the year to 31 December 2010
2010 2009
note GBP'000 GBP'000
Revenue 3 22,008 19,394
Cost of sales 14,094 12,279
-------- --------
Gross profit 7,914 7,115
Administrative expenses
-------------------------------- ----- -------- --------
Goodwill impairment - 30
Intangibles amortisation 335 279
Other administrative expenses 4,935 4,436
-------------------------------- ----- -------- --------
5,270 4,745
Operating profit 3 2,644 2,370
Financial income 29 12
Profit before taxation 2,673 2,382
Taxation 765 685
-------- --------
Profit and total comprehensive
income attributable to owners
of the parent 1,908 1,697
======== ========
Earnings per share
Basic and diluted 4 17.8p 15.7p
======== ========
Consolidated statement of financial position
as at 31 December 2010
2010 2009
GBP'000 GBP'000
Non current assets
Intangible assets 2,231 990
Property, plant and equipment 202 192
2,433 1,182
-------- --------
Current assets
Inventories 1,001 718
Trade and other receivables 3,561 2,956
Cash and cash equivalents 2,459 2,506
-------- --------
7,021 6,180
-------- --------
Total assets 9,454 7,362
Current liabilities
Trade and other payables 6,971 5,069
Current tax liabilities 366 380
-------- --------
Total current liabilities 7,337 5,449
Non current liabilities
Deferred tax liability 3 47
-------- --------
Total net assets 2,114 1,866
======== ========
Equity
Issued share capital 105 108
Share premium 628 628
Capital redemption reserve 31 28
Retained earnings 1,350 1,102
Total equity 2,114 1,866
======== ========
Consolidated statement of changes in equity
for the year to 31 December 2010
Capital
Share Share redemption Retained
capital premium reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January 2009 108 628 28 90 854
Profit and total
comprehensive
income for the
year - - - 1,697 1,697
Dividend - - - (668) (668)
Share based payment
credit - - - 13 13
Movements in
respect of
purchase of own
shares - - - (30) (30)
At 31 December
2009 108 628 28 1,102 1,866
Profit and total
comprehensive
income for the
year - - - 1,908 1,908
Dividend - - - (1,173) (1,173)
Movements in
respect of
purchase of own
shares (3) - 3 (487) (487)
At 31 December
2010 105 628 31 1,350 2,114
========= ========= ============ ========== ========
Consolidated statement of cash flows
for the year to 31 December 2010
2010 2009
GBP'000 GBP'000
Operating activities
Profit before taxation 2,673 2,382
Adjustments for:
Goodwill impairment - 30
Intangibles amortisation 335 279
Share based payments - 13
Depreciation charge 101 103
Interest received (29) (12)
Operating cash flows before changes
in working capital 3,080 2,795
(Increase)/decrease in inventories (188) 18
(Increase)/decrease in trade and other
receivables (431) 208
Increase/(decrease) in trade and other
payables 1,656 (104)
-------- --------
Cash generated from operating activities 4,117 2,917
Tax paid (822) (549)
-------- --------
Net cash flows from operating activities 3,295 2,368
-------- --------
Investing activities
Purchase of plant and equipment (111) (95)
Purchase of software licence - (91)
Purchase price in respect of business
combination (1,600) -
Interest received 29 12
Net cash flows from investing activities (1,682) (174)
-------- --------
Financing activities
Repurchase of own shares for cancellation (487) (30)
Equity dividends paid (1,173) (668)
Net cash flows from financing activities (1,660) (698)
-------- --------
Net (decrease)/increase in cash and
cash equivalents (47) 1,496
Cash and cash equivalents at start of
period 2,506 1,010
-------- --------
Cash and cash equivalents at end of
period 2,459 2,506
======== ========
Notes to the preliminary statement
1. Basis of preparation
The financial information set out in these preliminary results
does not constitute the company's statutory accounts for 2009 or
2010.
Statutory accounts for the years ended 31 December 2010 and 31
December 2009 have been reported on by the Independent Auditors.
The Independent Auditors' Report on the Annual Report and Financial
Statements for 2010 was unqualified, did not draw attention to any
matters by way of emphasis, and did not contain a statement under
498(2) or 498(3) of the Companies Act 2006.
Statutory accounts for the year ended 31 December 2009 have been
filed with the Registrar of Companies. The statutory accounts for
the year ended 31 December 2010 will be delivered to the Registrar
in due course.
2. Accounting policies
The financial information set out in these preliminary results
has been prepared using the recognition and measurement principles
of International Accounting Standards, International Financial
Reporting Standards and Interpretations adopted for use in the
European Union (collectively Adopted IFRSs). The accounting
policies adopted in this results announcement have been
consistently applied to all the years presented except for the
expensing in 2010 of GBP26,000 costs incurred in the Redstone
acquisition which would have been, under prevailing accounting
standards in previous years, treated as part of the cost of the
acquisition, and are consistent with the policies used in the
preparation of the statutory accounts for the period ended 31
December 2010. Save for this change, the principal accounting
policies adopted are unchanged from those used in the preparation
of the statutory accounts for the period ended 31 December
2009.
3. Segmental analysis
For management reporting purposes and operationally, the Group
consists of two business segments: (i) telephone maintenance and
equipment sales, and (ii) telephone network services. Each segment
applies its respective resources across inter-related revenue
streams which are reviewed by management collectively under these
headings. The businesses of each segment and a further analysis of
revenue are described under their respective headings in the
Business review.
Year to 31 December 2010
Maintenance Network Central/
and equipment services inter- company Total
GBP'000 GBP'000 GBP'000 GBP'000
Segment revenue
before adjustment 16,286 5,816 (199) 21,903
Redstone deferred
income less costs 105 - - 105
--------------- ---------- ---------------- --------
Revenue 16,391 5,816 (199) 22,008
=============== ========== ================ ========
Operating profit
before customer
relationship
intangibles
amortisation and
Redstone
adjustments 2,491 540 (14) 3,017
Customer
relationship
intangibles
amortisation (62) (48) (193) (303)
--------------- ---------- ---------------- --------
Operating profit
before adjustments 2,429 492 (207) 2,714
Redstone redundancy
costs (175) - - (175)
Redstone deferred
income less costs 105 - - 105
--------------- ---------- ---------------- --------
Operating profit 2,359 492 (207) 2,644
--------------- ---------- ----------------
Interest income 29
--------
Profit before
taxation 2,673
Taxation (765)
--------
Profit after
taxation 1,908
========
Revenue is wholly attributable to the principal activities of
the Group and other than sales of GBP10,000 to other EU countries
arises predominantly within the United Kingdom.
Maintenance and equipment revenue consists of maintenance
related revenue of GBP11.678m and equipment, installation and other
revenue of GBP4.713m (2009 - GBP10.289m and GBP3.572m). Network
services revenue consists of call traffic revenue of GBP2.690m,
line rental revenue of GBP2.282m and other revenue of GBP0.844m
(2009 - GBP2.826m, GBP2.048m and GBP0.829m).
Intercompany trading consists of telecommunications services,
and recharges of sales, engineering and rent costs, GBP48,000
attributable to the Maintenance and equipment segment and
GBP151,000 to the Network services segment.
In 2010 the Maintenance and equipment division had one customer
(2009 - One) which accounted for more than 10% of its revenue,
totalling GBP5.201m (2009 - GBP2.876m).
Maintenance Network Central/
and equipment services inter- company Total
GBP'000 GBP'000 GBP'000 GBP'000
Other
Capital expenditure 111 - - 111
Depreciation 101 - - 101
Amortisation and
impairment 62 80 193 335
=============== ========== ================ ========
Year to 31 December 2009
Maintenance Network Central/
and equipment services inter- company Total
GBP'000 GBP'000 GBP'000 GBP'000
Revenue 13,861 5,703 (170) 19,394
=============== ========== ================ ========
Operating profit
before goodwill
impairment and
customer
relationship
intangibles
amortisation 2,233 490 (44) 2,679
Customer
relationship
intangibles
amortisation (22) (64) (223) (309)
--------------- ---------- ---------------- --------
Operating profit 2,211 426 (267) 2,370
--------------- ---------- ----------------
Interest income 12
--------
Profit before
taxation 2,382
Taxation (685)
--------
Profit after
taxation 1,697
========
Revenue is wholly attributable to the principal activities of
the Group and other than sales of GBP51,000 to other EU countries
arises predominantly within the United Kingdom.
Intercompany trading consists of telecommunications services,
and recharges of sales, engineering and rent costs, GBP69,000
attributable to the Maintenance and equipment segment and
GBP101,000 to the Network services segment.
Other
Capital expenditure 95 91 - 186
Depreciation 103 - - 103
Amortisation and
impairment 22 64 223 309
==== === ==== ====
4. Earnings per share
Earnings per share is calculated by dividing the profit after
tax for the period by the weighted average number of shares in
issue for the period, these figures being as follows:
2010 2009
GBP'000 GBP'000
Earnings used in basic and diluted
EPS, being profit after tax 1,908 1,697
Goodwill impairment, intangibles
amortisation and non-trading accounting
effects of the Redstone acquisition,
less tax thereon 265 215
Adjusted earnings 2,173 1,912
2010 2009
Number (000s) Number (000s)
Weighted average number of shares 10,693 10,790
Potentially dilutive shares 25 8
-------------- --------------
10,718 10,798
============== ==============
Earnings per share
Basic 17.8p 15.7p
Basic and diluted 17.8p 15.7p
Adjusted - as above but excluding 20.3p 17.7p
goodwill impairment, intangibles amortisation
and non-trading accounting effects
of the Redstone acquisition
Adjusted and diluted 20.3p 17.7p
====== ======
The adjustment above in respect of goodwill impairment and
intangibles amortisation, the non-trading accounting effects of the
Redstone acquisition and tax thereon, has been made in order to
provide a clearer picture of the trading performance of the
Group.
In calculating diluted earnings per share, the weighted average
number of ordinary shares in issue is adjusted to assume conversion
of all dilutive potential ordinary shares. The Group has one
category of potentially dilutive ordinary share, being those share
options granted to employees where the exercise price is less than
the average price of the Company's ordinary shares during the
period.
5. Dividends
2010 2009
GBP'000 GBP'000
Dividends paid
Final 2008, paid 29 April 2009
- 3.1p per share - 334
Interim 2009, paid 2 October 2009
- 3.1p per share - 334
Second interim 2009, paid 25 March
2010
- 4.1p per share 441 -
Special interim 2009, paid 25 March
2010
- 2.9p per share 312 -
Interim 2010, paid 1 October 2010
- 3.9p per share 420 -
1,173 668
======== ========
The directors propose the payment of a final dividend for 2010
of 4.6p (2009 - equivalent second interim dividend of 4.1p) per
ordinary share, payable on 28 April 2011 to shareholders on the
register at 25 March 2011.
6. Purchase of own shares
Pursuant to the authority granted at the last two AGMs, the
Company repurchased and cancelled 295,000 of its own 1p ordinary
shares during 2010, at prices between 140p and 165p each and a
total cost of GBP487,000. The purchase represents 2.8% of the
Company's issued share capital as at 31 December 2010.
7. The annual report and accounts will be posted to shareholders
in due course and copies will also be available on the Group's web
site www.maintel.co.uk and on request from the Company's registered
office at 61 Webber Street, London SE1 0RF.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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