Maintel Regulatory News (MAI)

7 Sep 2006 07:01

Maintel Holdings PLC07 September 2006 Maintel Holdings Plc Interim results for the six months to 30 June 2006 Maintel Holdings Plc, the telecoms services company, announces interim unauditedresults for the six months to 30 June 2006. Financial highlights Turnover up 20% at £7.063m (2005: £5.901m), with underlying growth across thegroup, supplemented by £266,000 of the London Probation Board VoIP contractannounced in February 2006 Voice and data division gross profit grown by 40% over 2005 H1 Earnings per share before amortisation of goodwill of 5.3p (2005: 5.0p); afteramortisation, earnings per share were 5.1p (2005: 5.0p) Interim dividend proposed of 2.1p per share (2005: 1.5p) Cash balances at 30 June 2006 of £3.573m (31 December 2005: £3.625m) Operational highlights Enhanced network services portfolio has resulted in significant growth in thevoice and data division Contracted maintenance revenues running at record levels, following the signingof a number of larger new contracts, and the acquisition of District HoldingsLimited Significant VoIP equipment sales into existing customers including the LondonProbation Board project District Holdings Limited acquired in June 2006 for £1.060m cash, includingtransaction costs John Booth, Chairman, said: "Our planned focus on top line sales is starting to show results with turnoverincreasing strongly. Continued investment in sales combined with the Districtacquisition will impact positively for the remainder of 2006" For further information please contact: Tim Mason, Chief Executive 020 7401 4601Dale Todd, Finance Director 020 7401 0562 Chairman's statement Maintel's turnover grew strongly in the first half of 2006 thanks to ourincreased investment in sales capacity and a number of significant client wins.Growth was particularly strong in our voice and data business where turnover wasup 60% thanks to an enhanced product and services portfolio and to theacquisition at the end of 2005 of Pinnacle Voice and Data Limited. We alsocompleted in June the acquisition of a local competitor of our maintenancebusiness, District Holdings Limited. We are confident that these developmentswill lead to continued growth in the second half of the year and position uswell for the future. For the first half of the current year, Group turnover growth of 20% resulted inpre-goodwill earnings per share moving from 5.0p to 5.3p. Cash balances remainstrong and we are comfortable that the recent acquisition has integrated quicklyand will deliver in line with our expectations. Dividend In line with our policy of paying out around 40% of after-tax earnings as adividend to our shareholders, and given our confidence in the second halfoutturn, we are proposing an interim dividend of 2.1p per share to be paid on 29September 2006 to shareholders on record at 15 September 2006. J D S BoothChairman 6 September 2006 Chief Executive's review Results I am pleased to be able to report that Maintel has shown strong growth, withrevenues in the first half of 2006 up 20% on the equivalent period last year, at£7.1m, and earnings per share before goodwill amortisation of 5.3p against 5.0pin the first half of 2005. The strong revenue growth was led by an acceleration in the development of thevoice and data division, whose revenues increased by £573,000, or 60%, comparedwith the first six months last year, together with a £517,000 (44%) increase inMaintel Europe equipment sales, including £266,000 of the London Probation Board("LPB") contract announced earlier in the year. The District group, acquired inJune 2006, contributed £78,000 of revenue and I expect it to strengthen bothGroup turnover and PBT in coming months. Before £16,000 amortisation of goodwill, profit before tax was in line with ourexpectations, increasing from £950,000 to £965,000, after a significant plannedinvestment in sales resource in the first half from which we expect to seereturns in the second half of the year. Cash balances fell slightly from 31 December 2005, to £3.6m, benefiting fromfirst half profits and a large customer prepayment, but reduced by the purchaseof District for a net cash consideration of £877,000, a £323,000 dividend andthe re-purchase of shares for cancellation at a cost of £114,000. The Board anticipates that Group turnover will continue to increase in thesecond half, giving us confidence that we will meet expectations for the fullyear. The focus remains on developing the Group's maintenance base through organicgrowth and acquisition, leading to sales of additional products and servicesinto our customer base. Maintel Europe The growth in the division's revenues - up 12% from the equivalent period lastyear, at £5.5m - came predominantly from VoIP equipment sales and installationsas we upgrade many of our existing customers with new technology. A number ofsignificant maintenance orders did not go live until later in the period,leaving maintenance revenues up only slightly on 2005. This profile has resultedin the maintenance-related recurring revenues of the division being £3.7m in theperiod (68% of the division's total revenues, compared with 75% in theequivalent period last year.) The benefits of first half signings will, ofcourse, be seen in the second half of the year. Equipment sales increased again in the period, up £517,000 compared with thefirst half of 2005, around half of this growth coming from the LPB contractannounced earlier in the year. It is expected that a further £860,000 of LPB revenue will be recognisable inthe second half of 2006. As anticipated, although gross profit has increased, the gross margin percentagehas reduced in the period due primarily to an increase in more labour-intensivework undertaken in the period, with an average 5 additional engineers employedcompared with 2005, higher overtime costs and an increased use of contractors.From a Group perspective, the disproportionate growth in revenue from the voiceand data division has also impacted gross margin percentage, as that divisionoperates at lower gross margin than Maintel Europe. Central overheads remained tightly under control, though were increased by theadditional sales resource noted earlier. Maintel's business model remains robust, providing a premium service to itsincreasing customer base and up-selling new technologies through our accountmanagement team. We continue to be a leader in enhanced fault management with a recent additionto provide customers with automated e-mail and text messaging with fault updatesas and when required. Maintel Voice and Data Maintel Voice and Data's revenues have grown from £0.95m in the first half of2005, to £1.15m in the second half, to £1.52m in the first half of 2006. Asexpected, this growth has come from a broadening of the division's productofferings - the division saw £125,000 of the increase from the second half lastyear coming from line rental, a revenue stream introduced later in 2005 andwhich continues to develop. The core call traffic business grew revenues by£105,000 in the same period, with the division's data services revenues alsogrowing in the period. Also as expected, the division's gross margin as a percentage of revenue hasreduced slightly with the addition of lower profit products, line rental marginbeing around half that of call traffic, for example. Gross profit was, however,up 40% over 2005 H1, at £456,000. However, the anticipated benefits of beingable to offer a more comprehensive telecoms package are being seen, with morecustomers taking more than one service from Maintel. Again, costs remain closely monitored, though the revenue growth and spread ofproducts has required additional sales and administrative resource to be added.Commission payments of around £45,000 have been saved in the period followingthe acquisition of Pinnacle - the previous recipient of these - in December2005. District group The District group was acquired on 12 June 2006, for £1.060m including costs;£183,000 of cash was acquired with the group, so that the net cash cost was£877,000. The group operates in virtually identical markets to Maintel, butbrings another product offering - Samsung - to the Maintel stable, andintegration of District's operations into Maintel has been substantiallycompleted. District's directors left the group on acquisition and the group'sremaining property leases expire at the end of 2006, so significant cost savingsare expected going forward from these and other synergies. The District acquisition will primarily provide a fresh base of over 400established customers into which to sell additional services, whilst increasingthe recurring revenue platform of the Group. In its last financial year, to 31 August 2005, the District group reportedrevenues of £1.636m and a profit before tax of £4,000. Balance sheet The balance sheet remains healthy. It is worth noting that a significant advancepayment by a customer in the first half, together with the purchase - unpaid at30 June - of equipment for that customer, has temporarily inflated stock,creditors and deferred income. As noted earlier, cash balances remained strong at the half year, at £3.6m. Goodwill increased by £965,000 on the acquisition of District, whilst £16,000 ofthe goodwill arising on last year's acquisition of Pinnacle was amortised in theperiod. I am very pleased with the continued hard work and dedication of all ouremployees and look forward to a successful second half of the year. Tim MasonChief Executive 6 September 2006 Maintel Holdings Plc Consolidated profit and loss accountfor the six months to 30 June 2006 Unaudited Unaudited Audited six months to six months to year ended 30 June 2006 30 June 2005 31 Dec 2005 £'000 £'000 £'000Turnover------------------------- ---------- ---------- ----------Existing operations 6,985 5,901 12,197Acquisitions 78 - -------------------------- ---------- ---------- ---------- 7,063 5,901 12,197 Cost of sales 4,305 3,414 7,188 ---------- ---------- ---------- Gross profit 2,758 2,487 5,009 Administrative expenses------------------------- ---------- ---------- ----------Goodwill amortisation 16 - -Other administrative expenses 1,871 1,609 3,256------------------------- ---------- ---------- ---------- 1,887 1,609 3,256Operating profit------------------------- ---------- ---------- ----------Existing operations 843 878 1,753Acquisitions 28 - -------------------------- ---------- ---------- ---------- 871 878 1,753 Interest receivable 78 74 153Interest payable and similarcharges - (2) (2) ---------- ---------- ----------Profit on ordinary activities 949 950 1,904before taxation Taxation on profit on 285 285 577ordinary activities ---------- ---------- ---------- Profit on ordinary activities 664 665 1,327after taxation ========== ========== ========== Earnings per share Basic and diluted (note 3) 5.1p 5.0p 10.0p ========== ========== ========== Maintel Holdings Plc Consolidated balance sheetas at 30 June 2006 Unaudited Unaudited Audited 30 June 2006 30 June 2005 31 Dec 2005 £'000 £'000 £'000Fixed assetsIntangible assets 1,176 - 227Tangible assets 287 282 240 ---------- ---------- ---------- 1,463 282 467 ---------- ---------- ----------Current assetsStocks 1,332 653 585Debtors 3,003 1,998 1,947Cash at bank and in hand 3,573 3,380 3,625 ---------- ---------- ---------- 7,908 6,031 6,157 Creditors: amounts 3,265 1,941 2,085falling due within one year ---------- ---------- ---------- Net current assets 4,643 4,090 4,072 Deferred income (4,231) (2,987) (2,891) ---------- ---------- ----------Net assets 1,875 1,385 1,648 ========== ========== ========== Capital and reservesCalled up share capital 128 135 129Share premium 628 628 628Capital redemption reserve 8 1 7Profit and loss account 1,111 1,098 884Treasury shares - (477) - ---------- ---------- ----------Shareholders' funds 1,875 1,385 1,648 ========== ========== ========== Maintel Holdings Plc Consolidated cash flow statementfor the six months to 30 June 2006 Unaudited Unaudited Audited six months six months year ended to 30 June to 30 June 31 Dec 2006 2005 2005 £'000 £'000 £'000 Reconciliation of operating profit to netcash inflow from operating activities Operating profit 871 878 1,753Goodwill amortisation 16 - -Depreciation charge 65 80 143(Increase)/decrease in stocks (615) (17) 51(Increase)/decrease in debtors (782) 56 132Increase/(decrease) in creditors 2,017 (346) (299) ---------- ---------- ---------- Net cash inflow from operatingactivities 1,572 651 1,780 ========== ========== ========== Cash flow statement--------------------- Net cash inflow from operating activities 1,572 651 1,780 Returns on investments andservicing of financeNet interest received 78 72 151 TaxationCorporation tax (305) (179) (494) Capital expenditure and financialinvestmentPayments to acquire tangible fixed assets (83) (98) (119) Acquisitions and disposals------------------------ ---------- ---------- ----------Purchase of subsidiary undertaking (1,060) - (352)Net cash acquired with subsidiaryundertaking 183 - 124------------------------ ---------- ---------- ---------- (877) - (228) Equity dividends paid (323) - (196) FinancingRepurchase of own shares forcancellation (114) (477) (680) ---------- ---------- ----------(Decrease)/increase in cash in the period (52) (31) 214 ========== ========== ========== Reconciliation of net cash flow to movement in net cash (Decrease)/increase in cash in the period (52) (31) 214 Net cash at start of period 3,625 3,411 3,411 ---------- ---------- ----------Net cash at end of period 3,573 3,380 3,625 ========== ========== ========== Maintel Holdings Plc Notes to the interim report 1. Basis of preparation of interim financial information The financial information included in this report does not constitute statutoryaccounts as defined in section 240 of the Companies Act 1985. The financialinformation for the year ended 31 December 2005 has been extracted from thestatutory accounts for that period, a copy of which has been delivered to theRegistrar of Companies. The auditor's report on these statutory accounts wasunqualified and did not contain a statement under section 237(2) or (3) of theCompanies Act 1985. The interim accounts for the six months to 30 June 2006 and30 June 2005 are unaudited and have been prepared on the basis of the accountingpolicies set out in the statutory accounts for the year ended 31 December 2005. 2. Segmental analysis Unaudited Unaudited Audited six months to six months to year ended 30 June 2006 30 June 2005 31 Dec 2005 £'000 £'000 £'000 Turnover Telephone system maintenance 5,537 4,948 10,094Telephone network services 1,526 953 2,103 ---------- ---------- ---------- 7,063 5,901 12,197 ========== ========== ========== Gross profit Telephone system maintenance 2,302 2,161 4,313Telephone network services 456 326 696 ---------- ---------- ---------- 2,758 2,487 5,009 ========== ========== ========== Profit before taxation Telephone system maintenance 786 857 1,691Telephone network services 179 93 213Goodwill amortisation (16) - - ---------- ---------- ---------- 949 950 1,904 ========== ========== ========== 3. Earnings per share Earnings per share have been calculated using the weighted average number ofshares in issue during the period. This and earnings, being profit after tax,are as follows. An adjusted earnings per share figure - excluding theamortisation of goodwill - is also shown in order to provide a clearer pictureof the trading performance of the Group. Unaudited Unaudited Audited six months to six months to year ended 30 June 2006 30 June 2005 31 Dec 2005 £'000 £'000 £'000 Earnings used in basic and dilutedEPS, being profit after tax 664 665 1,327 Goodwill amortisation 16 - - ---------- ---------- ----------Adjusted earnings, being profitafter tax, before goodwillamortisation 680 665 1,327 ========== ========== ========= Weighted average number of shares 12,930 13,409 13,232 ========== ========== ========== Adjusted basic and diluted 5.3p 5.0p 10.0p ========== ========== ========== The weighted average in 2006 has been adjusted for the purchase of the Company'sshares noted below. 4. Repurchase of own shares for cancellation On 15 June 2006, and pursuant to the authority granted to it at its annualgeneral meeting in April, the Company acquired 80,000 ordinary shares of 1peach, at a total cost of £114,000. These shares were then cancelled. 5. Dividends In accordance with FRS 21, the proposed interim dividend is not shown in thefinancial statements for the period under review as it had not been resolved topay it as at 30 June 2006. No dividend was paid in the six months to 30 June2005. Six months to Year ended 30 June 2006 31 Dec 2005 £'000 £'000Dividends paidInterim 2005, paid 26 September 2005 - 1.5p per share 196 Final 2005, paid 24 April 2006 - 2.5p per share 323 ========== ========== 6. Acquisition On 12 June 2006 the Company acquired 100% of the issued share capital ofDistrict Holdings Limited. The consideration of £1,060,000, including £35,000 ofprofessional costs and stamp duty, was fully satisfied in cash. Based on theprovisional acquisition balance sheet, as amended for fair value adjustments,goodwill of £965,000 has been capitalised. No amortisation of goodwill on thisacquisition has been expensed in the period due to the proximity of theacquisition date to the period end. 7. Statement of movement in reserves Capital Profit and loss redemption account reserve £'000 £'000At 1 January 2006 7 884Profit for the period - 664Dividend - (323)In respect of purchaseof own shares 1 -Appropriated in respectof purchase of ownshares - (114) ---------- ---------- At 30 June 2006 8 1,111 ========== ========== Independent review report to Maintel Holdings Plc Introduction We have been instructed by the Company to review the financial information forthe six months ended 30 June 2006 on pages 6 to 11. We have read the otherinformation contained in the interim report and considered whether it containsany apparent misstatements or material inconsistencies with the financialinformation. Our report has been prepared in accordance with the terms of our engagement toassist the Company in meeting the requirements of the rules of the London StockExchange for companies trading securities on the Alternative Investment Marketand for no other purpose. No person is entitled to rely on this report unlesssuch a person is a person entitled to rely upon this report by virtue of and forthe purpose of our terms of engagement or has been expressly authorised to do soby our prior written consent. Save as above, we do not accept responsibility forthis report to any other person or for any other purpose and we hereby expresslydisclaim any and all such liability. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by the directors. The directors areresponsible for preparing the interim report in accordance with the rules of theLondon Stock Exchange for companies trading securities on the AlternativeInvestment Market which require that the half-yearly report be presented andprepared in a form consistent with that which will be adopted in the Company'sannual accounts having regard to the accounting standards applicable to suchannual accounts. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4issued by the Auditing Practices Board for use in the United Kingdom by auditorsof fully listed companies. A review consists principally of making enquiries ofgroup management and applying analytical procedures to the financial informationand underlying financial data and based thereon, assessing whether theaccounting policies and presentation have been consistently applied unlessotherwise disclosed. A review excludes audit procedures such as tests ofcontrols and verification of assets, liabilities and transactions. It issubstantially less in scope than an audit performed in accordance withInternational Standards on Auditing (UK and Ireland) and therefore provides alower level of assurance than an audit. Accordingly we do not express an auditopinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 June 2006. BDO STOY HAYWARD LLPChartered AccountantsLondon 6 September 2006 Ends This information is provided by RNS The company news service from the London Stock Exchange