Maintel Holdings Plc, a leading provider of cloud and managed communications services, announces its results for the twelve-month period to 31 December 2020.
· Cloud and software revenues increased to 26% of total Group revenue (2019: 22%)
· Group revenue down 13% to £106.4m (2019: £122.9m) with recurring revenue at 73% (2019: 70%). Reduction in revenue driven by:
· Delays in the implementation of project work as a result of the pandemic; and
· A reduced managed services support base going into the year following the previously announced loss of several legacy contracts in 2019
· Group adjusted EBITDA decreased 20% to £9.5m (2019: £11.8m)
· Loss for the year of £1.7m (2019: profit for the year of £3.2m)
· Adjusted earnings per share at 31.9p, a decrease of 39% (2019: 52.6p)
· Basic loss per share at 12.1p (2019: earnings per share of 22.4p)
· Strong cash conversion of 123% of adjusted EBITDA (2019: 88%), including a £2.9m working capital benefit arising from HMRC VAT deferment program; excluding this benefit underlying cash conversion was 92%
· Significant reduction in period end net debt to £22.3m, (2019: £25.7m) with a further reduction post period end
· Transformation to a Cloud and Managed Services business continued, notwithstanding the uncertainty caused by the pandemic, with strong momentum in take-up of Cloud offering across both the Public and Private sector
· Total number of contracted seats increased by 31% to 102,000 at the year end, ahead of management expectations
· Acceleration of restructuring programme that led to £3m of annualised OPEX cost reductions
Post period end
· Completion of the sale of the Managed Print Services business to Corona Corporate Solutions for a total consideration £4.5m, enabling the Group to focus better on the core business of managed cloud communications, while strengthening the balance sheet
· Trading to date for this financial year (revenue and EBITDA) and order intake are all in line with management expectations
· Q1 wins included significant renewals from JD Sports, a new managed SD-WAN from Sanctuary Housing, projects for Guys & St Thomas's Hospital, LAN projects for a number of local authorities; they include the first wins for our Callmedia CX-Now Contact Centre as a Service, and public cloud wins across Genesys, RingCentral and Microsoft Teams in addition to our ICON Communicate platform
· H1 Cloud forecast on track for full year ambition of an additional 50k contracted seats across all platforms, taking total contracted seats to over 150k
· Amendment and extension to current bank facilities with the National Westminster Bank ("NWB") signed on 14 May 2021, extending the facility for 12 months to October 2022 on improved terms
Key Financial Information
Audited results for 12 months ended 31 December:
Adjusted profit before tax
(Loss) / Profit before tax
Adjusted earnings per share
Basic (loss)/ earnings per share
Final dividend per share proposed
· The primary impact on trading has been a delay to some major projects as a result of site access issues and also customers managing economic uncertainty in their businesses
· Early and decisive measures were implemented in March 2020, with a focus on cash preservation, strengthening the balance sheet and protecting employees, while ensuring continued, seamless support for customers
· Measures taken to control costs included use of Government support schemes, including the furlough scheme for a small number of employees
· The actions taken as a result of COVID-19 have accelerated our strategy to right size the business, restructure the sales team and strengthen the balance sheet
Commenting on the Group's results, Ioan MacRae, CEO, said:
"In common with companies across the globe, 2020 presented a challenge like no other to our customers, our staff and our company. So many organisations in both the public and private sectors depended on Maintel to keep their mission critical operations functioning. In the public sector that includes front line hospital trusts, police control rooms, fire services, care home operators, local authorities, government agencies and social housing providers - and in the private sector financial services organisations, high street household name retailers and utility organisations, providing critical national infrastructure services.
I am immensely proud of the role that Maintel has played in supporting our customers during the pandemic, and of the fantastic response from our colleagues who made the transition to remote working while continuing to work incredibly hard to ensure that our customers could do the same. Worthy of special recognition is our field-based engineering team who continued to provide onsite technical support, in particular to NHS Trusts, throughout the pandemic.
As a result of the pandemic we have understandably seen certain customers delay new orders to preserve cash flows whilst uncertainty around the macroeconomic outlook remained. Furthermore, certain project work was delayed due to difficulties with site access during the lockdowns. Inevitably this had a significant impact on both revenue and EBITDA in the period. Revenue was also affected by the full year impact of the loss of several legacy contracts in 2019 within our channel partner network, as previously announced.
Notwithstanding these challenges, the business achieved a huge amount during the period, with the meeting of KPIs such as reaching over 100,000 cloud seats, showing a positive momentum in line with our new strategy. We continued to invest in the Group's transformation to a cloud first business, launching four significant new product sets and undertaking a significant restructure from the Board down.
As a result of the restructure, a process which commenced prior to the pandemic but which we accelerated as a consequence of it, we have achieved a significant, underlying annualised reduction in OPEX of £3m and a business which is leaner, stronger, more efficient and better positioned to take advantage of the opportunities available and changing customer requirements.
This year has started promisingly and in line with management's expectations; we enter the second half of the year with a healthy orderbook. We have continued to simplify the business and focus on our cloud offering, announcing the sale of the Managed Print Service business in March, the proceeds of which have been used to reduce net debt.
I firmly believe that the business is in a strong position to deliver organic growth on a like for like basis in both revenue and EBITDA in FY 2021."