Maintel Holdings Plc, a leading provider of communications cloud and managed services, announces its results for the twelve-month period to 31 December 2019.
· Financial performance in line with trading update published 9th January 2020
· Group revenue down 10% to £122.9m (2018: £136.5m) with recurring revenue at 70% (2018: 69%)
· Driven by delays in the re-letting of the public sector procurement frameworks, macro-economic uncertainty and the performance of two channel partners
· Group adjusted EBITDA decreased 7% to £11.8m (2018: £12.7m), including an increase of £1m on IFRS 16 adoption
· Adjusted earnings per share at 52.6p, a decrease of 20% (2018: 65.5p)
· Basic earnings per share increased 56% to 22.4p (2018: 14.4p)
· Strong underlying cash conversion of 88% of adjusted EBITDA (2018: 84%)
· Period end net debt of £25.7m, (2018: £25.5m)
Post period end
· Trading in Q1 FY20 in line with management expectations
· In the light of the current global COVID-19 pandemic and in order to preserve working capital through these uncertain times, the Board has made the difficult but prudent decision not to declare a final dividend for the full year 2019 (2018: 19.5p per share)
· Extension and amendment agreement to existing bank facilities signed on 26 May 2020, providing a revised facility of £34.5m with a maturity date of 27 October 2021. The amended facility has a more flexible covenant package than the previous arrangement and provides additional funding headroom
· Continued strong momentum in take-up of Cloud offering, with the number of contracted seats increasing by 25% to 78,000 at the year end
· Cloud and software revenues increased by 34%, to £27.3m, accounting for 22% of Group revenue (2018: 15%)
· Strong performance in December with large wins in public and private sector following resolution of public sector procurement framework and increased political certainty
Key Financial Information
Audited results for 12 months ended 31 December:
Adjusted profit before tax
Profit before tax
Adjusted earnings per share
Basic earnings per share
Final dividend per share proposed
· Early measures taken to protect employees and ensure continued support of customers with all but critical front-line staff home-based from late March
· Some short-term increase in business from supporting customers with the transition to higher than usual levels of remote working, including enablement projects for key NHS trusts and associated healthcare providers; As expected the Group has also seen some major projects delayed, partly due to site-access practicalities but also as customers themselves manage the economic uncertainty in their businesses
· Cost-control measures introduced from 1st April including the furlough of a small number of staff and reduced working week for most back-office personnel with associated reduction in salaries, including the management team and the Board
· Due to COVID related uncertainty, guidance for FY20 is suspended. We look forward to re-instating guidance once the impact of the pandemic has moderated.
Commenting on the Group's results, Ioan MacRae, CEO, said:
"As highlighted in the Group's January trading statement, 2019 was a challenging year for Maintel. The delays to the award of the public sector procurement framework and the performance of some of our major channel partners, combined with wider economic and political uncertainty in the UK, resulted in a reduction in our support services revenue and a lower than expected performance in our technology division. Whilst impacting our FY19 performance, we do not expect these same issues to impact in FY20 following the General Election and resolution of the public sector procurement framework.
Operationally, the Group has made good progress against its strategic objectives, with continued growth in our key focus areas; for example, delivering 25% growth in the number of cloud seats on our ICON platform for the year. We have continued to invest throughout the year in our ICON cloud platform to enable us to scale and compete even more effectively in 2020, expanding vendor solutions, infrastructure, functionality and capability.
As a leading cloud, software and managed services company, Maintel will continue to focus on our key strategic vendors and partners through FY20 to ensure we offer our customers the latest solutions, services and products from market leading technology manufacturers, supported by our managed services and application development teams.
Having been with the business seven months I am optimistic for its future and confident we would have seen a return to both organic revenue and EBITDA growth during this year, were it not for the interruptions to operations from COVID-19. We entered the year underpinned by a buoyant order book boosted by robust late Q4 performance including several large contract wins in December following the General Election and a healthy pipeline. The team and I are focussing on our key initiatives, continuing to invest in our ICON and Callmedia solution offerings, whilst further expanding our managed services offerings.
The COVID-19 situation clearly creates uncertainty for all businesses, including Maintel. While we saw some benefit in late Q1 and early Q2 assisting our customers with their response to the new working conditions, we have also seen some customers placing major projects on hold. Whilst approximately 70% of the Company's revenue for the full year was recurring, providing a base level of visibility for revenues this year, we have taken early and robust measures to protect Maintel, including cost-reduction and preservation of cash, while ensuring we are able to support our customers in full - many of whom are on the front-line of the COVID-19 effort. With the support of the Board, we remain confident that our fast response and ongoing management of the Coronavirus situation will leave the Company well positioned when the economic impacts begin to recede."