Interim Results
Maintel Holdings PLC
08 September 2005
Maintel Holdings Plc
--------------------
Interim results for the six months to 30 June 2005
--------------------------------------------------
8 September 2005
Maintel Holdings Plc, the telecoms services company, announces interim unaudited
results for the six months to 30 June 2005.
Financial highlights
--------------------
Profit before tax up 21% to £950,000 (2004: £784,000)
Turnover down marginally at £5.901m, due largely to the previously-highlighted
loss of two major network services customers in 2004 (2004: £5.939m)
Earnings per share of 5.0p (2004: 4.0p), an increase of 25%
Maiden dividend as a listed company - interim payment of 1.5p per share
Cash balances at 30 June 2005 of £3.380m (31 December 2004: £3.411m), after
payment of listing costs and £477,000 cost of share buybacks
Operational highlights
----------------------
New long-term maintenance contracts signed with Nokia and UCL
Product portfolio expanded to include networking products from Cisco
Awarded approval from PASA, the NHS purchasing agency
Contracted maintenance revenues continue to be strong - maintenance-related
revenues of £3.711m (2004: £3.646m)
Deal signed to provide Broadband products to customer base
VOIP equipment sales continuing strongly
John Booth, Chairman, said:
'I am pleased to report another period of strong profit growth for your company,
with profit before tax of £950,000 in the six months to 30 June 2005, an
increase of 21% over the same period last year.
The market continues to be buoyant, and assuming this is sustained, further
revenue growth is projected for the second half of 2005. We continue to invest
in and develop our products and services to take advantage of the changing
marketplace.'
For further information please contact:
Tim Mason, Chief Executive 020 7401 4601
Dale Todd, Finance Director 020 7401 0562
Chairman's statement
--------------------
I am pleased to report another period of strong profit growth for your company,
with profit before tax of £950,000 in the six months to 30 June 2005, an
increase of 21% over the same period last year.
My previous report referred to relatively low levels of new sales being achieved
during 2004, and so I am pleased to report that new maintenance sales have
reverted to a more historically normal level, whilst renewal invoicing continues
at a gratifyingly high level. The previously highlighted loss in 2004 of two
major network services customers reduced that division's revenues in comparison
with the first half of 2004, however revenues have already recovered to the
levels of 2004's second half.
We continue to develop our product offering in response to market demand. To
that end, and in line with my previous statement, we are supplying and
maintaining an increasing number of VoIP (Voice over IP) telephone systems.
Recognising the opportunities in maintaining IT interfaces to communications
systems, we have invested in personnel and training to enable us to add this to
our product offering.
We have also extended the range of products and services available to Maintel
Voice and Data in response to the changing marketplace, and have secured our
first major wholesale line rental contract.
Outlook
-------
The market continues to be buoyant, and assuming this is sustained, further
revenue growth is projected for the second half of 2005. We continue to invest
in and develop our products and services to take advantage of the changing
marketplace.
Dividend
--------
As indicated at the time of flotation, it is our intention to pay dividends of
around 40% of the year's after-tax earnings, and our maiden interim dividend of
1.5p per share is proposed to be paid on 26 September 2005 to shareholders on
record at 16 September 2005.
J D S Booth
Chairman
7 September 2005
Chief Executive's review
------------------------
Results
-------
I am delighted to be able to report a further increase in profitability in this,
our first half year as a listed company.
Profit before tax increased 21%, from £784,000 to £950,000, with earnings per
share mirroring this and additionally benefiting from a share buy back in May
2005, thus increasing from 4.0p to 5.0p.
This has been achieved through improved operational efficiencies and economies
of scale, and tight control over costs. Revenue remained close to 2004 levels
(£5.901m against £5.939m in 2004), and was held back by the loss of two major
network services customers at the end of 2004 (as mentioned in our Prospectus)
and a number of new maintenance customers not going live until the second
quarter of 2005.
Cash balances amounted to £3.380m at 30 June 2005, compared with £3.411m at the
end of 2004. £196,000 of December's float costs were paid in 2005, and £477,000
of 2005's cash inflow has been used to purchase 420,000 of the Company's shares
in the market. These shares are currently held as treasury shares.
The focus remains on developing the Group's maintenance base, selling additional
products and services into that base.
Maintel Europe
--------------
The improvement in maintenance sales seen in the second half of 2004 has
continued into 2005, with new business and renewals running ahead of budget and
maintenance related recurring revenues amounting to £3.711m in the six months to
30 June 2005 (75% of the division's £4.948m total revenues), compared with
£3.646m (74%) in the equivalent period last year. The benefits of first half
signings will continue to be seen in the second half of the year.
Recurring revenue from maintenance contracts continued to be strong during the
first half with new long term contracts from both Nokia and University College
London (UCL). Additionally Maintel was awarded approved supplier status by the
NHS purchasing agency, PASA, enabling it to provide services to all NHS sites in
the UK.
Our product portfolio has been expanded to include networking equipment to
enable Maintel to provide an 'end-to-end' solution to customers, and our
training programs extended to incorporate equipment from Cisco and other major
players in the IT field.
Equipment sales have been strong, with new orders in excess of budget in the
first six months. There has been significant success in providing VOIP solutions
into the customer base.
Despite some pressure on equipment sales margin, overall gross margin for the
division improved during the period due to the operational efficiencies noted
above, and was 44% for the six months, against 42% for 2004 as a whole.
Maintel Voice and Data
----------------------
Maintel Voice and Data started the year having recently lost two of its larger
customers, so it is encouraging to report that its revenue of £953,000 had
recovered to be on a par with the second half of 2004.
Further sales resource has been added to the division, and new product offerings
such as wholesale line rental and broadband products have been added to its
portfolio. These may impact percentage margins, but are expected to expand the
potential market of the division and move it further towards a 'one stop shop'
solutions provider.
Tim Mason
Chief Executive
7 September 2005
Maintel Holdings Plc
--------------------
Consolidated profit and loss account for the six months to 30 June 2005
-----------------------------------------------------------------------
Unaudited Audited Audited
six months to six months to year ended
30 June 2005 30 June 2004 31 Dec 2004
£'000 £'000 £'000
Turnover 5,901 5,939 11,542
Cost of sales 3,414 3,570 6,901
----- ----- -----
Gross profit 2,487 2,369 4,641
General administration expenses 1,609 1,635 3,187
Cost of AIM listing - - 309
Administrative expenses 1,609 1,635 3,496
------ ------ -----
Operating profit 878 734 1,145
Interest receivable 74 50 120
Interest payable and similar charges (2) - -
--- --- ---
Profit on ordinary activities 950 784 1,265
before taxation
Taxation on profit on 285 237 470
ordinary activities
Profit on ordinary activities 665 547 795
after taxation
Dividends - 406 406
--- --- ---
Retained profit for the period 665 141 389
The profit and loss account contains all gains and losses recognised in the
period and all amounts relate to continuing operations.
Maintel Holdings Plc
--------------------
Consolidated profit and loss account for the six months to 30 June 2005 (cont)
------------------------------------------------------------------------------
Unaudited Audited Audited
six six year
months to months ended
to
30 June 30 June 31 Dec
2005 2004 2004
Earnings per share
Basic and diluted (six months to 30 June 2004 5.0p 4.0p 5.9p
restated for share capital changes - note 3)
Adjusted - as above but excluding cost of AIM listing 5.0p 4.0p 8.2p
in December 2004
Dividend per share
(2004 restated for share capital changes) - 3.0p 3.0p
An interim dividend of 1.5p per share is proposed to be paid on 26 September
2005. In accordance with FRS 21, this dividend is not shown in the financial
statements for the period under review as it had not been resolved to pay it as
at 30 June 2005.
Maintel Holdings Plc
--------------------
Consolidated balance sheet
--------------------------
as at 30 June 2005
Unaudited Audited Audited
30 June 2005 30 June 2004 31 Dec 2004
£'000 £'000 £'000
Fixed assets
Tangible assets 282 289 264
Current assets
Stocks 653 733 636
Debtors 1,998 2,286 2,050
Cash at bank and in hand 3,380 2,682 3,411
6,031 5,701 6,097
Creditors: amounts 1,941 1,983 2,120
falling due within one year
Net current assets 4,090 3,718 3,977
Deferred income (2,987) (3,058) (3,044)
Net assets 1,385 949 1,197
Capital and reserves
Called up share capital 135 12 135
Share premium 628 751 628
Capital redemption reserve 1 1 1
Profit and loss account 1,098 185 433
Treasury shares (477) - -
Shareholders' funds - equity 1,385 949 1,197
Maintel Holdings Plc
--------------------
Consolidated cash flow statement for the six months to 30 June 2005
-------------------------------------------------------------------
Unaudited Audited Audited
six six year
months to months to ended
30 June 30 June 31 Dec
2005 2004 2004
£'000 £'000 £'000
Reconciliation of operating profit to net cash
inflow from operating activities
Operating profit 878 734 1,145
Depreciation charge 80 108 196
(Increase)/decrease in stocks (17) 166 263
Decrease in debtors 56 12 248
(Decrease)/increase in creditors (346) (212) 44
Net cash inflow from operating activities 651 808 1,896
Cash flow statement
Net cash inflow from 651 808 1,896
operating activities
Returns on investments and
servicing of finance
Net interest received 72 50 120
Taxation
Corporation tax (179) (66) (341)
Capital expenditure and financial
investment
Payments to acquire tangible (98) (83) (146)
fixed assets
Financing
Purchase of treasury shares (477) - -
Equity dividends paid - (406) (406)
(Decrease)/increase in cash in the period (31) 303 1,123
Reconciliation of net cash flow to movement in net cash
(Decrease)/increase in cash in the period (31) 303 1,123
Net cash at start of period 3,411 2,288 2,288
Net cash at end of period 3,380 2,591 3,411
Maintel Holdings Plc
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Notes to the interim report
---------------------------
1. Basis of preparation of interim financial information
The financial information included in this report does not constitute statutory
accounts as defined in section 240 of the Companies Act 1985. The financial
information for the year ended 31 December 2004 has been extracted from the
statutory accounts for that period, a copy of which has been delivered to the
Registrar of Companies. The auditor's report on these statutory accounts was
unqualified and did not contain a statement under section 237(2) or (3) of the
Companies Act 1985. The financial information for the period ended 30 June 2004
has been extracted from the prospectus issued for the purposes of the
introduction of the Company's shares to the Alternative Investment Market in
December 2004. The interim accounts for the six months to 30 June 2005 are
unaudited and have been prepared on the basis of the accounting policies set out
in the statutory accounts for the year ended 31 December 2004.
2. Segmental analysis
Unaudited Audited Audited
six months to six months to year ended
30 June 2005 30 June 2004 31 Dec 2004
£'000 £'000 £'000
Turnover
Telephone system maintenance 4,948 4,916 9,566
Telephone network services 953 1,023 1,976
----- ----- -----
5,901 5,939 11,542
Gross profit
Telephone system maintenance 2,161 2,017 3,980
Telephone network services 326 352 661
----- ----- -----
2,487 2,369 4,641
Profit before taxation
Telephone system maintenance 857 652 1,326
Telephone network services 93 132 248
---- ----- -----
950 784 1,574
Exceptional item - cost of AIM listing - - (309)
950 784 1,265
3. Earnings per share
Earnings per share have been calculated using the weighted average number of
shares in issue during the period. This and earnings, being profit after tax,
are as follows:
Unaudited Audited Audited
six months six months year
to to ended
30 June 30 June 31 Dec
2005 2004 2004
£'000 £'000 £'000
Earnings used in basic and diluted EPS, being 665 547 795
profit after tax
Cost of AIM listing - - 309
Adjusted earnings 665 547 1,104
Weighted average number of shares 13,409 13,517 13,517
The weighted average in 2005 has been adjusted for the purchase of the Company's
shares noted below.
4. Purchase of treasury shares
During May 2005, and pursuant to the authority granted to it at its annual
general meeting in April, the Company acquired 420,000 ordinary shares of 1p
each, at a total cost of £477,000. These shares are currently held in the
balance sheet as treasury shares.
Independent review report to the shareholders of Maintel Holdings Plc
---------------------------------------------------------------------
Introduction
------------
We have been instructed by the Company to review the financial information for
the six months ended 30 June 2005 on pages 5 to 10. We have read the other
information contained in the interim report and considered whether it contains
any apparent misstatements or material inconsistencies with the financial
information.
Our report has been prepared in accordance with the terms of our engagement to
assist the Company in meeting the requirements of the rules of the London Stock
Exchange for companies trading securities on the Alternative Investment Market
and for no other purpose. No person is entitled to rely on this report unless
such a person is a person entitled to rely upon this report by virtue of and for
the purpose of our terms of engagement or has been expressly authorised to do so
by our prior written consent. Save as above, we do not accept responsibility for
this report to any other person or for any other purpose and we hereby expressly
disclaim any and all such liability.
Directors' responsibilities
---------------------------
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the directors. The directors are
responsible for preparing the interim report in accordance with the rules of the
London Stock Exchange for companies trading securities on the Alternative
Investment Market which require that the half-yearly report be presented and
prepared in a form consistent with that which will be adopted in the Company's
annual accounts having regard to the accounting standards applicable to such
annual accounts.
Review work performed
---------------------
We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board for use in the United Kingdom by auditors
of fully listed companies. A review consists principally of making enquiries of
group management and applying analytical procedures to the financial information
and underlying financial data and based thereon, assessing whether the
accounting policies and presentation have been consistently applied unless
otherwise disclosed. A review excludes audit procedures such as tests of
controls and verification of assets, liabilities and transactions. It is
substantially less in scope than an audit performed in accordance with United
Kingdom Auditing Standards and therefore provides a lower level of assurance
than an audit. Accordingly we do not express an audit opinion on the financial
information.
Review conclusion
-----------------
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2005.
BDO STOY HAYWARD LLP
Chartered Accountants
London
7 September 2005
Ends
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