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 Â£950,000 (2004: Â£784,000) Turnover down marginally at Â£5.901m, due largely to the previously-highlighted loss of two major network services customers in 2004 (2004: Â£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 Â£3.380m (31 December 2004: Â£3.411m), after payment of listing costs and Â£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 Â£3.711m (2004: Â£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 Â£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 Â£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 Â£784,000 to Â£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 (Â£5.901m against Â£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 Â£3.380m at 30 June 2005, compared with Â£3.411m at the end of 2004. Â£196,000 of December's float costs were paid in 2005, and Â£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 Â£3.711m in the six months to 30 June 2005 (75% of the division's Â£4.948m total revenues), compared with Â£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 Â£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 Â£'000 Â£'000 Â£'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 Â£'000 Â£'000 Â£'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 Â£'000 Â£'000 Â£'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 -------------------- 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 Â£'000 Â£'000 Â£'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 Â£'000 Â£'000 Â£'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 Â£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 This information is provided by RNS The company news service from the London Stock Exchange

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