Last checked at 4 Mar 2010 07:00
Preliminary results for the year to 31 December 2009
Maintel Holdings Plc, the telecoms services company, announces preliminary results for the year to 31 December 2009.
Highlights
Adjusted* earnings per share of 17.7p (2008: 12.1p); basic earnings per share of 15.7p (2008: 9.2p)
Group revenue unchanged at £19.4m, but with lower equipment sales replaced with recurring maintenance business. Recurring revenue increased by 8% to £16.0m (2008: £14.8m) to be 82% of total 2009 revenue
Profit before tax of £2.382m (2008: £1.589m)
Adjusted* profit before tax of £2.675m (2008: £2.021m)
Virtually all major maintenance contracts expiring in 2009 were successfully renewed
Sales of broadband, call traffic, line rental and related products were maintained at £5.7m with two large previously flagged lost customers replaced
Equipment sales lower partly due to avoidance of lower margin business and partly to economic environment
Strong operating cash flow and year end cash balances of £2.5m (2008: £1.0m); the Group has no debt
Second interim dividend proposed of 4.1p per share (2008: equivalent final dividend of 3.1p), plus a special interim dividend of 2.9p making 10.1p for the year (2008: 5.6p)
*adjusted for goodwill impairment, intangible amortisation and, in 2008, one-off professional costs
For further information please contact:
Eddie Buxton, Chief Executive 020 7401 4601
Dale Todd, Finance Director 020 7401 0562
| FinnCap |
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| Marc Young / Rhydian Bankes (Corporate Finance) | 020 7600 1658 |
| Tom Jenkins (Corporate Broking) |
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Chairman's statement
Maintel's revenue was unchanged in 2009 at £19.4m (2008 - £19.4m). However better margins derived from our cost reduction efforts of late 2008 and early 2009, combined with a healthier revenue mix caused profit before tax for the year to increase to £2.4m (2008 - £1.6m).
Our core maintenance business, with its high level of recurring revenues, grew from £9.2m in 2008 to £10.3m in 2009. This was the result of good contract renewal rates, new client signings arising from our continuing strong relationship with Cable & Wireless Worldwide and our increasing number of partnerships with other large players in the telecoms industry, and lower than historic attrition rates. Equipment sales were lower, at £3.6m for the year, down from £4.7m in 2008, as we continued not to chase low margin business at a time of sluggish economic activity. We expect the current level of sales to provide a stable base for growth as economic conditions improve. For 2009 the shift from equipment installation to maintenance support has enabled us to utilise our engineering resource with greater efficiency.
Network services revenues were also affected by a slow economy and were only marginally ahead for the year. A closer look at this part of the business shows that revenues from two large clients lost, flagged in our 2008 report were only replaced in the second half of 2009 so the outlook for 2010 is more positive, especially as we began the new year by further increasing the sales resource in this area of our business. Business call rates are still competitive however and network solutions remains an area of lower margin for the Group.
Basic earnings per share grew to 15.7p (2008 - 9.2p) and adjusted earnings per share, as defined in the business review, grew to 17.7p (2008 - 12.1p). Shareholders will remember that we took advantage of the fall in stock market valuations to repurchase and cancel a substantial amount of our equity towards the end of 2008 and we have purchased for cancellation a more modest amount, 40,000 shares, in 2009. We remain committed to our progressive dividend policy and a second interim dividend for 2009 of 4.1p takes our total for the year to 7.2p, in line with our target pay out ratio of 40% (2008 - 5.6p). We ended the year with a good pipeline of business and prospects and a debt-free consolidated statement of financial position with cash reserves of £2.5m. With interest rates remaining low and in view of this comfortable cash position, the Board has declared a one off special interim dividend of 2.9p to be paid alongside the second interim dividend. This will be payable on 25 March 2010 to shareholders on the register at 12 March 2010.
We remain vigilant for acquisitions that represent good value as consolidation continues in our industry; the stability of the Company as we enter 2010 puts us in a good position to integrate new business whether organic or acquired.
I would like finally to express the Board's thanks to our loyal and hardworking staff for their energy and commitment to the Company.
J D S Booth
Chairman
3 March 2010
Business review
Results
As anticipated in the half-year statement, revenue and profit improved in the second half of the year, primarily as a result of new maintenance contracts and the effect of the cost reductions implemented in the first half of 2009.
Adjusted profit before tax for the year was £2.675m, a 32% increase on 2008, with unadjusted profit before tax increasing by 50% to £2.382m.
The Company repurchased 1,150,000 shares in Q4 2008 and this, combined with the increased profitability, has enhanced EPS by 46% from 12.1p (adjusted diluted) in 2008 to 17.7p in 2009. Basic diluted EPS increased by 71%, from 9.2p in 2008 to 15.7p in 2009.
|
| H1 2009 | H2 2009 | 2009 |
| 2008 |
|
| £000 | £000 | £000 |
| £000 |
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|
|
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| Revenue | 9,401 | 9,993 | 19,394 |
| 19,415 |
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| Profit before tax | 967 | 1,415 | 2,382 |
| 1,589 |
| Add back goodwill impairment, intangibles amortisation and one-off professional fees | 161 | 132 | 293 |
| 432 |
| Adjusted profit before tax |
1,128 | 1,547 | 2,675 |
| 2,021 |
|
Basic and diluted earnings per share | 6.3p | 9.4p | 15.7p |
| 9.2p |
|
|
|
|
|
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| Adjusted basic and diluted earnings per share | 7.5p | 10.2p | 17.7p |
| 12.1p |
Overall, revenues fell marginally in the year, with the two major new contracts announced during the year performing well and contributing to a £1.132m increase in maintenance revenues over 2008. 2010 will see a full year's revenue from these contracts, as well as revenue from several other significant contracts already signed with the same partner.
The increase in maintenance revenues helped compensate for the £1.130m reduction in equipment sales, the result of the subdued economic environment combined with the continuation of our strategy of avoiding low margin business. Equipment sales in the first half of the year were virtually identical to those in the second and are projected to continue at similar levels in the short to medium term.
Network services revenues increased marginally in the year, with the two major contracts lost in 2008 having been successfully replaced. The second half of 2009 showed encouraging growth over the first, giving confidence in further development of the division in 2010.
Recurring revenue (maintenance and network services) increased again in the year to £16.0m (82% of total revenues) (2008 - £14.8m and 76%), providing additional visibility of revenues notwithstanding the effects of attrition.
| Revenue analysis (£000) | 2009 | 2008 |
| Maintenance related | 10,289 | 9,157 |
| Equipment, installations and other | 3,572 | 4,702 |
| Total maintenance and equipment division |
13,861 |
13,859 |
| Network services division | 5,703 | 5,678 |
| Intercompany | (170) | (122) |
| Total Maintel Group | 19,394 | 19,415 |
Net cash flow from operating activities continues to be strong, at £2.368m in 2009 (2008 - £1.391m), with cash balances increasing to £2.506m at the year end (2008 - £1.010m) after dividend payments of £668,000. 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 slightly in the year as shown in the table above, with a reduction in equipment sales to what are now considered to be sustainable levels in the current environment being offset by an increase in maintenance revenues.
The latter increased by £1.132m (12%) in the year, primarily as a result of the continuing relationship with Cable & Wireless Worldwide, which has contributed further business in 2010. In addition, virtually all of the major contracts that came up for renewal during the year have been re-signed, with the attrition percentage remaining below historical averages.
In light of the successful relationship developed with Cable & Wireless Worldwide, partnerships with other integrators were developed during the year and began contributing to revenues, and others are being developed. These relationships provide a ready source of typically high value contracts with relatively low levels of associated sales cost. The traditional direct sales model does, of course, continue to be operated in parallel, ensuring that the Group is not overly dependent on any one or a particular group of partners.
The continuing reduced levels of equipment sales at the end of 2008 and beginning of 2009 resulted in a further reduction in headcount early in H1 2009 as shown below, at a cost of £123,000 in the first half.
|
Headcount |
Average 2009 |
Average 2008 | At 31 December 2009 |
| Sales and customer service | 44 | 49 | 45 |
| Engineers | 79 | 84 | 77 |
|
| 2009 | 2008 |
| Division gross profit (£000) | 5,828 (42%) | 5,017 (36%) |
The division's gross profit improved significantly in 2009, a combination of the mid-2008 and early-2009 cost reductions and the change in sales mix from equipment sales - with its associated purchase costs - to maintenance sales.
Net margin (operating profit as a percentage of revenue) from the division improved almost in line with gross margin, from 10.3% in 2008, to 16.0%, the division's overheads continuing to be tightly controlled during the year.
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 products providing connectivity between customers' own offices, remote staff and the outside world. This includes inbound and outbound telephone call services, line rental, broadband, data networks and mobile services.
| Revenue analysis (£000) | 2009 | 2008 |
| Call traffic | 2,826 | 3,405 |
| Line rental | 2,048 | 1,645 |
| Other | 829 | 628 |
| Total network services | 5,703 | 5,678 |
|
| 2009 | 2008 |
| Division gross profit (£000) | 1,400 (25%) | 1,406 (25%) |
Revenue increased slightly during the year, with the two large losses in late 2008 - caused by the acquisition of one client and the withdrawal from its market of another - being successfully replaced with new revenues.
The mix of revenue has altered significantly during the year, as the call-traffic dominant customers lost in late 2008 have been replaced by more line rental weighted business in 2009, including one particular large estate connected around the middle of 2009. Call traffic revenues have also reduced as a result of the recession, with Ofcom reporting a drop in UK call traffic year on year.
Line rental revenues are more solid, being less affected by seasonality and general economic activity, however they attract lower margins than call traffic. Overall gross profit has been maintained at the previous year's level, however, partly as a result of increased margins earned from both call traffic and line rental business because of lower buy-in costs, but also as a result of new, lower cost, connection procedures and the lower margins attached to the business lost. In particular better line rental margins were achieved in the second half of 2009 as a result of consolidating lines with BT openreach.
Within Other revenue, data services increased by 29% in the year to £537,000, becoming a significant product offering, and sales of our IP based telephony services such as SIP trunking and hosted telephone services products are growing.
Aside from the two major customers which cancelled in 2008, attrition in the division remained at its historically low levels, providing a solid base from which to enter 2010. The H2 2009 network services profit was 18% up on the first half and two more large contracts were signed in Q4 2009.
Administrative expenses, excluding goodwill impairment and intangibles amortisation
| Administrative expenses (£000) | 2009 | 2008 |
| Sales expenses | 2,080 | 2,114 |
| Other administrative expenses (excluding goodwill impairment and intangibles amortisation) |
2,372 |
2,302 |
| Total other administrative expenses | 4,452 | 4,416 |
Sales and administrative costs continue to be closely controlled and rose by less than 1% in the year. The table below shows relevant headcount in relation to revenue.
|
| 2009 | 2008 |
| Average Group headcount during the period |
153 |
162 |
| Average sales and service headcount | 53 | 58 |
| Average corporate and admin headcount | 21 | 20 |
| Group revenue (£000) | 19,394 | 19,415 |
Interest
Net interest receivable fell from £68,000 to £12,000 in 2009. The share buybacks in late 2008 and in March 2009 reduced the Group's cash reserves significantly at the time and, together with the poor rates of interest achievable on low risk deposits, this has resulted in minimal interest income in the period.
Taxation
The consolidated statement of comprehensive income shows a tax rate of 28.8% (2008 - 31.2%). The two main trading companies are taxed at 28.0% (2008 - 28.5%). Disallowables raise the effective rate above this, as does an element of the goodwill impairment charge which does not attract tax relief. This last factor reduced in 2009 helping to lower the effective rate compared to the previous year.
Dividends
A final dividend for 2008 of 3.1p per share (£334,000 in total) was paid on 29 April 2009, and an interim 2009 dividend of 3.1p per share (£334,000) was paid on 2 October 2009.
It is proposed to pay a second interim dividend of 4.1p in respect of 2009, together with a one off special interim dividend of 2.9p, payable on 25 March to shareholders on the register at the close of business on 12 March. In accordance with accounting standards, these dividends are not accounted for in the financial statements for the period under review as they had not been committed as at 31 December 2009.
Consolidated statement of financial position
The consolidated statement of financial position remains sound, with £2.5m of cash and no debt, facilitating continued growth from existing resources.
Trade receivables and trade payables have reduced by £372,000 and £317,000 respectively since 31 December 2008 partly due to the reduction in equipment sales and good collections in December 2009.
The value of maintenance stock has reduced by £71,000 in the year, to £604,000, due to minimal purchases of additional parts in the year following two years of significant investment, whilst normal half yearly provisioning has continued to be applied. The value of stock held for resale has increased from £61,000 to £114,000 as a result of more installations spanning the year end.
Deferred income has increased by £182,000, mostly due to the increase in maintenance revenues and deposits taken, although the increase has been curtailed by a major customer being invoiced on terms more favourable than the Group's standard annually in advance.
No significant expenditure has been required on plant and equipment during the period, with additions broadly matching depreciation.
The deferred tax liability arises from the application of IFRS, whereby a liability of £290,000 was created on the recognition of the intangible asset relating to the acquisition of the District group in 2006.
Intangible assets
The Group has three intangible assets: goodwill arising on the acquisition of Maintel Network Services Limited, an intangible asset represented by customer contracts and relationships acquired from District Holdings Limited and Callmaster Limited, and goodwill relating to the District acquisition.
The Maintel Network Services goodwill is subject to an impairment test at each reporting date. Impairment of £30,000 has been charged to the consolidated statement of comprehensive income in 2009 (2008 - £62,000), and the carrying value is £202,000 at 31 December 2009.
The intangible assets represented by purchased customer contracts and relationships are subject to an amortisation charge of 20% of cost per annum in respect of maintenance contract relationships and 14.2% per annum in respect of network services contracts. £263,000 was amortised in 2009 (2008 - £263,000), leaving a carrying value of £568,000. These assets are also subject to an impairment test each year, however no additional charge was required at 31 December 2009 or 2008.
The goodwill relating to the District acquisition is subject to an impairment test at each reporting date, and has not been subject to an impairment charge in 2009 (2008 - £58,000), leaving a carrying value of £145,000.
Purchase of own shares
Further to the authority granted at the last two AGMs, the Company repurchased and cancelled 40,000 of its own shares during 2009, at a price of 76p, and a total cost of £30,000.
The share price at 31 December 2009 was 145p.
Cash flow
At 31 December 2009 the Group had cash and bank balances of £2.506m (2008 - £1.010m), all of it unrestricted. Cash generated from operating activities in the year was £2.917m, out of which £668,000 was paid in dividends, and £549,000 in corporation tax.
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 potential 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 new 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.
Certain customers are gradually adopting VoIP technology which has a potential threat to the reselling of call minutes. 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 2009. 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 are expected to reduce this share.
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.
The current exceptional economic environment has impacted negatively on the Group's revenues, largely due to the curtailment in discretionary spend by some of the Group's customers, which has had a negative effect particularly on equipment sales. These conditions may persist and, indeed, may worsen, although the Group has already reduced its cost base to reflect reduced revenues and will continue to monitor its sales pipeline and costs closely.
The economic environment may also cause an increased number of the Group's customers to be unable to meet their financial obligations and/or to seek to delay payment beyond agreed terms. The Group carefully assesses the creditworthiness of prospects and will insure its network services debt where deemed necessary and possible; a significant proportion of the Group's revenue relates to maintenance charges paid in advance, to which no credit risk attaches.
Nortel
A significant proportion of the Group's business is associated with products previously supplied by Nortel.
Nortel has been acquired by Avaya, which has indicated that certain Nortel products will be discontinued in the medium term The directors consider that the only impact on the Group in the short to medium term is the possible postponement of the purchase of Nortel equipment and the purchase of equipment from alternative manufacturers. This is unlikely to have a significant effect on the Group, given the lower levels of equipment sales being budgeted due to the economic climate and the ability of the Group to offer alternative manufacturers' systems to customers. The directors have plans to grow the Group's Avaya capabilities further in response to Nortel's acquisition.
Outlook
With a number of larger maintenance orders taken during 2009 contributing a full year's revenue in 2010, together with both maintenance and equipment orders ahead of target so far in 2010, the maintenance and equipment division has had a promising start to the year. The network services division is also seeing growth though at a slower rate, however investment has been made in additional sales resource which is expected to have a positive impact from the middle of the year.
With costs remaining tightly controlled, we are confident of making further progress during 2010.
Eddie Buxton
Chief Executive
3 March 2010
Maintel Holdings Plc
Consolidated statement of comprehensive income
for the year to 31 December 2009
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| 2009 | 2008 |
|
| note | £'000 | £'000 |
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| Revenue | 3 | 19,394 | 19,415 |
|
|
|
|
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| Cost of sales |
| 12,279 | 13,095 |
|
|
|
|
|
| Gross profit |
| 7,115 | 6,320 |
|
|
|
|
|
| Administrative expenses |
|
|
|
| Goodwill impairment |
| 30 | 120 |
| Intangibles amortisation |
| 263 | 263 |
| Other administrative expenses |
| 4,452 | 4,416 |
|
|
| 4,745 | 4,799 |
|
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|
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|
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|
|
|
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| Operating profit | 3 | 2,370 | 1,521 |
|
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| Financial income |
| 12 | 69 |
| Financial charges |
| - | (1) |
|
|
|
|
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| Profit before taxation |
| 2,382 | 1,589 |
|
|
|
|
|
| Taxation |
| 685 | 495 |
|
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| Profit and total comprehensive income attributable to owners of the parent |
|
1,697 |
1,094 |
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| Earnings per share |
|
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| Basic and diluted | 4 | 15.7p | 9.2p |
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Maintel Holdings Plc
Consolidated statement of financial position
as at 31 December 2009
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| 2009 | 2008 |
|
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| £'000 | £'000 |
|
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| Non current assets |
|
|
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| Intangible assets |
| 990 | 1,208 |
| Property, plant and equipment |
| 192 | 200 |
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|
|
| 1,182 | 1,408 |
|
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| Current assets |
|
|
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| Inventories |
| 718 | 736 |
| Trade and other receivables |
| 2,956 | 3,164 |
| Cash and cash equivalents |
| 2,506 | 1,010 |
|
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|
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| 6,180 | 4,910 |
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| Total assets |
| 7,362 | 6,318 |
|
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| Current liabilities |
|
|
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| Trade and other payables |
| 5,069 | 5,173 |
| Current tax liabilities |
| 380 | 193 |
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| Total current liabilities |
| 5,449 | 5,366 |
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| Non current liabilities |
|
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| Deferred tax liability |
| 47 | 98 |
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| Total net assets |
| 1,866 | 854 |
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| Equity |
|
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| Issued share capital |
| 108 | 108 |
| Share premium |
| 628 | 628 |
| Capital redemption reserve |
| 28 | 28 |
| Retained earnings |
| 1,102 | 90 |
|
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| Total equity |
| 1,866 | 854 |
|
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Maintel Holdings Plc
Consolidated statement of changes in equity
for the year to 31 December 2009
|
|
Share capital |
Share premium | Capital redemption reserve |
Retained earnings |
Total |
|
| £'000 | £'000 | £'000 | £'000 | £'000 |
|
|
|
|
|
|
|
| At 1 January 2008 | 124 | 628 | 12 | 1,442 | 2,206 |
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| Profit for the year | - | - | - | 1,094 | 1,094 |
| Dividend | - | - | - | (664) | (664) |
| Movements in respect of purchase of own shares |
(16) |
- |
16 |
(1,782) |
(1,782) |
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| At 31 December 2008 | 108 | 628 | 28 | 90 | 854 |
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|
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| Profit 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 |
Maintel Holdings Plc
Consolidated statement of cash flows
for the year to 31 December 2009
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| 2009 | 2008 |
|
| £'000 | £'000 |
|
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|
|
| Operating activities |
|
|
| Profit before taxation | 2,382 | 1,589 |
| Adjustments for: |
|
|
| Goodwill impairment | 30 | 120 |
| Intangibles amortisation | 279 | 263 |
| Share based payments | 13 | - |
| Depreciation charge | 103 | 118 |
| Interest received | (12) | (69) |
| Other interest paid | - | 1 |
| Loss on disposal of plant and equipment | - | 2 |
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| Operating cash flows before changes in working capital |
2,795 |
2,024 |
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| Decrease in inventories | 18 | 93 |
| Decrease in trade and other receivables | 208 | 764 |
| Decrease in trade and other payables | (104) | (852) |
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| Cash generated from operating activities | 2,917 | 2,029 |
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| Tax paid | (549) | (638) |
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| Net cash flows from operating activities | 2,368 | 1,391 |
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| Investing activities |
|
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| Purchase of plant and equipment | (95) | (115) |
| Purchase of software licence | (91) | - |
| Proceeds from disposal of plant and equipment | - | 3 |
| Interest received | 12 | 69 |
|
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| Net cash flows from investing activities | (174) | (43) |
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| Financing activities |
|
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| Other interest paid | - | (1) |
| Repurchase of own shares for cancellation | (30) | (1,782) |
| Equity dividends paid | (668) | (664) |
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| Net cash flows from financing activities | (698) | (2,447) |
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| Net decrease in cash and cash equivalents | 1,496 | (1,099) |
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| Cash and cash equivalents at start of period | 1,010 | 2,109 |
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| Cash and cash equivalents at end of period | 2,506 | 1,010 |
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Maintel Holdings Plc
Notes to the preliminary statement
1. Basis of preparation
The financial information set out in these preliminary results does not constitute the company's statutory accounts for 2008 or 2009.
Statutory accounts for the years ended 31 December 2009 and 31 December 2008 have been reported on by the Independent Auditors. The Independent Auditors' Report on the Annual Report and Financial Statements for 2008 was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 237(2) or 237(3) of the Companies Act 1985. The independent Auditors' Report on the Annual Report and Financial Statements for 2009 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 2008 have been filed with the Registrar of Companies. The statutory accounts for the year ended 31 December 2009 will be delivered to the Registrar in due course.
2. Accounting policies
The financial information set out in these preliminary results has been prepared using the recognition and measurement principles of International Accounting Standards, International Financial Reporting Standards and Interpretations adopted for use in the European Union (collectively Adopted IFRSs). The accounting policies adopted in this results announcement have been consistently applied to all the years presented and are consistent with the policies used in the preparation of the statutory accounts for the period ended 31 December 2009. The principal accounting policies adopted are unchanged from those used in the preparation of the statutory accounts for the period ended 31 December 2008.
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 the following headings.
Year to 31 December 2009
|
| Maintenance and equipment |
Network services | Central/ inter- company |
Total |
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| £'000 | £'000 | £'000 | £'000 |
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|
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| Revenue | 13,861 | 5,703 | (170) | 19,394 |
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| ||||
| Other than sales of £51,000 to EU countries, revenue is wholly attributable to the principal activities of the Group and arises predominantly within the United Kingdom.
Maintenance and equipment revenue consists of maintenance related revenue of £10.289m and equipment, installation and other revenue of £3.572m (2008 - £9.157m and £4.702m). Network services revenue consists of call traffic revenue of £2.826m, line rental revenue of £2.048m and other revenue of £0.829m (2008 - £3.405m, £1.645m and £0.628m).
Intercompany trading consists of telecommunications services, and recharges of sales, engineering and rent costs, £69,000 attributable to the Maintenance and equipment segment and £101,000 to the Network services segment.
In 2009 the Group had one customer (2008 - None) which accounted for more than 10% of its revenue, totalling £2.876m.
| ||||
| Operating profit | 2,211 | 426 | (267) | 2,370 |
|
Interest income |
|
|
|
12 |
| Profit before taxation |
|
|
| 2,382 |
|
Taxation |
|
|
|
(685) |
| Profit after taxation |
|
|
| 1,697 |
|
|
|
|
|
|
|
|
|
|
|
|
| Balance sheet |
|
|
|
|
| Assets | 4,955 | 1,156 | 1,251 | 7,362 |
| Liabilities | (4,732) | (948) | 184 | (5,496) |
| Total | 223 | 208 | 1,435 | 1,866 |
|
|
|
|
|
|
|
|
|
|
|
|
| Other |
|
|
|
|
| Capital expenditure | 95 | 91 | - | 186 |
| Depreciation | 103 | - | - | 103 |
| Amortisation and impairment |
22 |
64 |
223 |
309 |
Year to 31 December 2008
|
| Maintenance and equipment |
Network services | Central/ inter- company |
Total |
|
| £'000 | £'000 | £'000 | £'000 |
|
|
|
|
|
|
| Revenue | 13,859 | 5,678 | (122) | 19,415 |
|
|
|
|
|
|
|
| ||||
| Other than equipment sales of £34,000 to EU countries, revenue is wholly attributable to the principal activities of the Group and arises predominantly within the United Kingdom.
Intercompany trading consists of telecommunications services, and recharges of sales, engineering and rent costs, £67,000 attributable to the Maintenance and equipment segment and £55,000 to the Network services segment. | ||||
|
Operating profit |
1,433 |
472 |
(384) |
1,521 |
|
Interest income |
|
|
|
68 |
| Profit before taxation |
|
|
| 1,589 |
|
Taxation |
|
|
|
(495) |
| Profit after taxation |
|
|
| 1,094 |
|
|
|
|
|
|
|
|
|
|
|
|
| Balance sheet |
|
|
|
|
| Assets | 4,594 | 1,308 | 416 | 6,318 |
| Liabilities | (4,462) | (1,158) | 156 | (5,464) |
| Total | 132 | 150 | 572 | 854 |
|
|
|
|
|
|
|
|
|
|
|
|
| Other |
|
|
|
|
| Capital expenditure | 115 | - | - | 115 |
| Depreciation | 118 | - | - | 118 |
| Amortisation and impairment |
22 |
48 |
313 |
383 |
| One off professional fees | - | - | 49 | 49 |
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:
|
| 2009 | 2008 |
|
| £'000 | £'000 |
| Earnings used in basic and diluted EPS, being profit after tax |
1,697 |
1,094 |
|
|
|
|
| Goodwill impairment and intangibles amortisation, less tax thereon
|
215 |
305 |
| One-off professional costs, less tax thereon | - | 35 |
|
Adjusted earnings |
1,912 |
1,434 |
|
|
2009 |
2008 |
|
| Number (000s) | Number (000s) |
|
|
|
|
| Weighted average number of shares | 10,790 | 11,832 |
| Potentially dilutive shares | 8 | - |
|
|
|
|
|
| 10,798 | 11,832 |
| Earnings per share |
|
|
| Basic | 15.7p | 9.2p |
| Basic and diluted | 15.7p | 9.2p |
| Adjusted - as above but excluding goodwill impairment, intangibles amortisation and one-off professional costs, less tax thereon |
17.7p |
12.1p |
| Adjusted and diluted | 17.7p | 12.1p |
|
|
|
|
The adjustment above in respect of goodwill impairment, intangibles amortisation, one-off professional costs 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 potential 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
|
| 2009 | 2008 |
|
| £'000 | £'000 |
| Dividends paid |
|
|
|
|
|
|
| Final 2007, paid 30 April 2008 |
|
|
| - 3.0p per share | - | 364 |
|
|
|
|
| Interim 2008, paid 10 October 2008 |
|
|
| - 2.5p per share | - | 300 |
|
|
|
|
| Final 2008, paid 29 April 2009 |
|
|
| - 3.1p per share | 334 | - |
|
|
|
|
| Interim 2009, paid 2 October 2009 |
|
|
| - 3.1p per share | 334 | - |
|
|
|
|
|
| 668 | 664 |
The directors propose the payment of a second interim dividend for 2009 of 4.1p (2008 - equivalent final dividend of 3.1p) per ordinary share, together with a one off special interim dividend of 2.9p per share, payable on 25 March 2010 to shareholders on the register at 12 March 2010.
6. Purchase of own shares
Pursuant to the authority granted at the last two AGMs, the Company repurchased and cancelled 40,000 of its own 1p ordinary shares during 2009, at a price of 76p each at a total cost of £30,000. The purchase represents 0.4% of the Company's issued share capital as at 31 December 2009.
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.