Annual Report
& Accounts
Maintel Holdings Plc
2012
Contents
1
2
3
10
11
14
16
19
20
21
22
23
24
25
43
44
48
Directors, Company details and advisers
Chairman’s statement
Business review
Board of directors
Report on corporate governance
Report of the Remuneration committee
Report of the directors
Statement of directors’ responsibilities
Independent auditor’s report
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes forming part of the financial statements
Balance sheet of Maintel Holdings Plc
Notes forming part of the balance sheet of Maintel Holdings Plc
Notice of annual general meeting
102
Heading Directors, Company details and advisers
Annual report and
financial statements 2012
Directors
J D S Booth
Chairman, Non-Executive Director
E Buxton
Chief Executive
A J McCaffery
Sales and Marketing Director
W D Todd
Finance Director
N J Taylor
Non-Executive Director
Secretary and registered office
W D Todd, 61 Webber Street, London SE1 0RF
Company number
3181729
Auditors
BDO LLP, 55 Baker Street, London W1U 7EU
Nominated broker and nominated adviser
finnCap Limited, 60 New Broad Street, London EC2M 1JJ
Registrars
Computershare Investor Services PLC, The Pavilions,
Bridgwater Road, Bristol BS99 6ZY
Tel: 0870 707 1182
1
Chairman’s statement
I am happy to report that Maintel grew its revenues by
9% in 2012 to £28.2m (2011- £25.9m) resulting in a 26%
increase in adjusted profits to £4.97m (2011 - £3.95m)
which equates to adjusted earnings per share of 35.1p,
a 28% increase on the previous year’s figure of 27.5p.
Our recurring revenue grew by 12% to £21.7m and now
represents 77% of overall revenues up from 76% at the
end of 2011.
Revenues from maintenance and equipment sales had
a slow year overall but improved significantly in the
second half; the network services division performed
very satisfactorily, growing by 11% for the year with
gross profits up 14% and margins improving from
28.4% to 28.9%. Our new mobile business, acquired in
October 2011, produced in its first full year revenues
of £2.94m and has integrated well into the broader
business.
As reported in our interim results, the anticipated
winding down of two substantial fixed term
maintenance contracts caused attrition levels to run
at a higher than usual level, especially in the first half.
The second half saw this trend improve and a large
new business win midway through the year meant
that our maintenance base grew slightly at year-end
compared with its 8% decline in 2011. We anticipate
attrition to return to more modest levels in 2013 and
are well positioned to facilitate customers’ upgrading
their equipment to newer technologies which require
less engineering support. This shift has already helped
our cost base in the maintenance division and should
produce further benefits in 2013. Equipment sales
also enjoyed a stronger second half with £3.66m of
revenues, up from £2.78m in the first half leaving the
year more or less flat with 2011. We entered the new
year with good order visibility for equipment sales.
Maintel Mobile has performed satisfactorily and
seen a pleasing rate of post-acquisition customer
renewals. We were gratified to be awarded Platinum
Dealer status by Vodafone in July. The cross selling
opportunities that we expected in adding a mobile
offering have made a promising start and we have
actively managed the client base to replace smaller
customers using fewer connections with larger, higher
revenue customers. For the year the total number of
connections managed by the company increased by 4%
to 13,859.
Cash generation remained strong, with adjusted net
cash flow from operating activities (as described in
the Business review) up 48% to £3.678m. We ended
the year with £1.9m in cash and no debt, having paid a
further £3.3m in consideration for last year’s mobile
acquisition, Totility Ltd, leaving a final payment of
£900,000 which was made at the beginning of 2013.
The board proposes a final dividend of 7.3p, bringing
the total payable for the year to 13.6p (2011: 6.0p and
10.6p), which will be paid on 25 April to shareholders
on the register on 22 March.
We enter the new year optimistic that the economic
environment will allow modest organic growth and
vigilant for sensibly priced acquisitions that would add
to our business.
I am grateful to all my colleagues for their hard work
and enthusiasm that has contributed to Maintel’s
success in the past year and thank our shareholders
for their continuing support.
J D S Booth
Chairman
8 March 2013
2
Annual report and
financial statements 2012
Business review
Results
Against a challenging market backdrop, 2012 has been another successful year for Maintel, with adjusted profits
(as described below) of £4.970m (2011 – £3.946m), an increase of 26%, with a consequent increase in adjusted
EPS of 28% to 35.1p (2011 – 27.5p).
Unadjusted profits were £1.405m in the year (2011 – £3.084m) and unadjusted EPS 3.4p (2011 – 20.0p), the main
difference between the two figures being the expensing under accounting standards of contingent consideration
payments relating to the acquisition of the mobile division in October 2011, together with the regular amortisation
of intangible assets.
Revenue increased by 9% over the previous year to £28.2m (2011 – £25.9m) with a strong showing from the
mobile and network services divisions more than compensating for the slower year experienced by the
maintenance and equipment division. With the inclusion of a full year’s revenue from the mobile division, total
recurring revenue (maintenance, network services and mobile) increased by 12% in the year to £21.7m (77% of
total revenues; 2011 – 76%). Excluding the impact of the acquisition of the mobile division, the Group returned to
healthy levels of year-on-year organic revenue growth in H2.
The Group’s cash flows remained strong, with significant growth in adjusted (as described on page 9) net cash
flows from operating activities of £3.678m (2011 - £2.488m) in the period, aided by the growth in profits and
strong working capital control. The Group ended the year with net cash of £1.941m despite a payment of £2.3m
during the year to the vendors of the mobile division by way of contingent consideration.
H2 2012
£000
14,681
1,210
2012
£000
28,171
1,405
2011
£000
Increase/
(decrease)
25,914
3,084
9%
(54)%
Revenue
Profit before tax
Add back customer relationship
intangibles amortisation
H1 2012
£000
13,490
195
370
361
731
Contingent consideration re Maintel Mobile
treated as remuneration (note 11)
1,789
1,045
2,834
Non-trading accounting adjustments
re Redstone acquisition
Adjustment to Redstone contingent
consideration
Costs relating to the acquisition of
Maintel Mobile
Adjusted profit before tax
Basic earnings per share
Diluted
Adjusted earnings per share*
Diluted
-
-
-
2,354
(2.8)p
(2.8)p
16.6p
16.4p
-
-
-
2,616
6.2p
6.2p
18.5p
18.3p
-
-
-
4,970
3.4p
3.4p
35.1p
34.7p
* Adjusted profit after tax divided by weighted average number of shares (note 10).
491
366
(141)
67
79
3,946
20.0p
19.9p
27.5p
27.4p
26%
(83)%
(83)%
28%
27%
3
Business review (continued)
Results (continued)
Revenue analysis (£000)
Maintenance related
Equipment, installations and other
Total maintenance and equipment division
Network services division
Mobile division
Intercompany
Total Maintel Group
* 2011 is for approximately 10 weeks only
Divisional performance is described further below.
Maintenance and equipment division
2012
12,246
6,435
18,681
6,730
2,941
(181)
Increase/
(decrease)
(5)%
(1)%
(4)%
11%
n/a*
2011
12,948
6,492
19,440
6,036
601
(163)
28,171
25,914
9%
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, both to our direct clients and into our partner customers.
The division’s revenues recovered strongly in H2 to record only a 4% reduction in the year with a reduction in
maintenance related revenue of 5% and in equipment sales by 1%. In the second half, equipment revenues in
particular saw a strong rebound on H1 levels.
Maintenance
As highlighted previously, we saw two large short-term contracts wind down during the year so that the revenue
associated with those customers was negligible by the end of 2012. In addition, and as noted at the half year,
we saw higher than usual customer attrition in H1, which was largely compensated by the winning of a major
long-term contract that commenced 1 June and saw the year end maintenance base increase to £12.3m
compared with £12.2m at the start of the year. This temporary dip in the base in H1 and the reduction in the base
in 2011 (from £13.2m at the start of the year to £12.2m at the end) resulted in the lower maintenance revenue
in the year. Although we expect to lose a further two larger maintenance contracts in 2013 as the customers
transition to alternative technology, we expect customer attrition levels to be materially improved versus the
levels we experienced in 2012.
During 2012 we have seen a planned and significant shift by some larger customers from legacy PBX
maintenance to the newer IP based technology maintenance with the awarding of four enterprise customer
network contracts which include multi-media contact centre contracts and data. This is a trend we expect to
continue into 2013.
Equipment sales
Equipment revenues decreased by 1% to £6.435m (2011 - £6.492m). After a weaker H1 sales performance, H2
saw a significant rebound with revenue of £3.657m (H1 2012 - £2.778m) during the period.
In line with general sector trends, we have seen some lengthening of sales cycles in the enterprise and public
sectors. Despite this, with a strong pipeline of orders signed but not completed, we are entering 2013 with good
levels of visibility for this division.
We have been awarded projects to consolidate and transform the communications infrastructure of two major
public sector organisations and a hosted IP PBX contract utilising the latest virtualised server technology for a
large multi-site commercial enterprise. Our consultancy and professional services work remains strong as our
partner business continues to prosper.
The marginal increase in the sales and customer service headcount across the division shown below has
arisen from an enhancement of the sales resource and an increase in customer service personnel to ensure
adequate service is provided on some new contracts with higher service level agreements than normal. The
reduction in average engineer headcount is partly due to (i) a review undertaken in July 2011 resulting in H2 2011
redundancies, (ii) redundancies of resident engineers associated with the previously mentioned large short-term
contracts that were lost during the year (iii) the increase in remote fault fix levels (where no engineer is required
on site) as new technology is rolled out to our customer base improving engineer utilisation.
4
Annual report and
financial statements 2012
Headcount
Average 2012
Average 2011*
Sales and customer service
Engineers
* excluding redundant Redstone employees
53
90
52
97
At 31
December
2012
55
87
Division gross profit (£000)
7,017 (38%)
7,063 (36%)
(1)%
2012
2011
Decrease
Margin for the maintenance and equipment division as a whole increased from 36.3% to 37.6%, with the
headcount reductions and the business mix both playing their parts in this improvement.
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
constituent elements internally.
Network services division
The network services division sells a portfolio of services which includes telephone line rental, inbound and
outbound telephone calls, data connectivity, internet access and hosted IP telephony solutions. These services
complement those offered by the maintenance and equipment division.
Revenue analysis (£000)
Call traffic
Line rental
Data services
Other
2012
2,656
2,979
799
296
2011
2,613
2,457
660
306
Total network services
6,730
6,036
Increase/
(decrease)
2%
21%
21%
(3)%
11%
Division gross profit (£000)
1,945 (29%)
1,713 (28%)
14%
2012
2011
Increase
Bucking the overall market trend, the Group has continued to see strong growth in its network services division.
With further growth in H2, the division’s revenue increased by £694,000, or 11%, in the year. The second half
benefited from the signing of a large contract for both call traffic and leased line rental revenue and this should
continue to benefit revenues in 2013.
Call minutes billed increased year on year, and despite continued pressure on rates including the reduction
in mobile termination rates, overall call revenue also increased slightly. Within this call revenue figure, new
business growth was strong and there were very low levels of attrition during the period, with no major
customers terminating in the year. The trends of previous years continued, with a healthy increase in line rental
revenues and the growth in data connectivity revenues, which delivered a 21% increase year on year and now
constitute 12% of the division’s total revenue.
With call rates continuing to fall, the strategic shift towards providing customers with data connectivity, VoIP
services and inbound call services continues to be a focus for the division and 2012 showed significant progress
being made in these areas. The focus here has been on IP based telephony, particularly SIP (Session Initiation
Protocol) and our growing base of line rental customers which enables the transition from older PBX technology
to hosted and other SIP technologies.
5
Business review (continued)
Network services division (continued)
We have seen an increase in the number of new customers taking multiple products and existing customers
being cross sold network services, particularly in the new SIP technology including a large charity and two
established customers in the education sector.
Overall divisional gross margin increased from 28.4% to 28.9% during the year, through tight cost control and
margin management particularly on the call traffic side of the business.
Mobile division
Maintel Mobile (the rebranded Totility acquisition) derives its revenues primarily from commissions received
under its dealer agreements with Vodafone and O2, supplemented by revenue derived from ongoing customer
monthly spend, with approximately 83% of connections at the end of 2012 under the Vodafone agreement and 17%
under the O2 agreement.
Since it was acquired in October 2011, the mobile division has performed well. The focus in the period since
acquisition has been on renewing existing customer contracts for the medium-term, whilst signing new
customers where these have presented themselves, including a range of cross-sells to existing Maintel
customers. One major cross sell during the year added over 600 connections to the base on its own. Further
success during the period came with Maintel Mobile being awarded the highest dealer status – Platinum – by
Vodafone, and the division’s largest O2 customer renewing its contract.
At 31 December 2012, the mobile division managed 13,859 (2011 - est13,387) connections, an increase of 472
(4%) in the period. Whilst the number of customers has decreased year on year, this merely reflects the loss of
some smaller customers with fewer connections on the managed base being replaced by larger, higher revenue
customers with a greater number of total connections.
The results of the mobile division since acquisition have been as follows:
£000
Revenue
Gross profit
Number of customers
Number of connections
2012
2,941
21 October to 31
December 2011
601
1,602 (54%)
316 (53%)
At 31
December
2012
1,042
13,859
At 31
December
2011
1,164
13,387
Increase/
(decrease)
(10)%
4%
In common with changes to terms with some of its other principal partners, one of the division’s suppliers has
announced that it plans to change its commercial arrangements such that commissions on new and re-signed
connections are no longer to be received up front, to be replaced by anticipated higher commission levels spread
over the lifetime of the customer contract. No firm date has been set for the new terms to take effect. Whilst in
the near term such a change would impact short term revenues, profits and cash flow, over the course of the
customer’s lifetime it is anticipated that these changes would be more profitable to the Group.
As reported previously, the Group acquired 100% of the share capital of Totility Limited (since renamed Maintel
Mobile Limited), a specialist UK mobile telecoms provider, on 21 October 2011, for an initial consideration of
£2.8m and a further consideration of £1.0m representing the net asset value of the company at the date of
acquisition, with further consideration of up to £4.0m payable dependent on its performance in the 12 months
post-acquisition. In order to allow greater flexibility in Maintel Mobile’s commercial and operational dealings
outside of the parameters set by the sale and purchase agreement, the Board concluded that an advance
agreement of the amount due in respect of the additional consideration would be in the best interests of the
Group and consequently agreed with the vendors a total additional consideration payment of £3.1m, of which
£2.2m was paid on 31 October 2012 and £0.9m on 3 January 2013. Separately, a further payment of £0.1m was
made on 10 July 2012 to the vendors under the terms of the sale and purchase agreement. As a result, the total
consideration payable for the company was £7.0m including the net assets. Further details of the acquisition are
shown in note 11 to the accounts.
6
Annual report and
financial statements 2012
The additional payment of £3.2m referred to above was conditional on the continued employment of one of the
vendors of Maintel Mobile until 20 October 2012. Under IFRS3 (Revised) this amount is charged to the income
statement over the earnout period as employee costs, rather than being treated as deferred consideration on
acquisition, with a consequent charge to the income statement of £2.834m in the period and £366,000 in 2011.
Administrative expenses, excluding intangibles amortisation and non-trading adjustments
Administrative expenses (£000)
Sales expenses
Other administrative expenses (excluding intangibles
amortisation, adjustment to acquisition consideration
and accrued acquisition consideration)
Total other administrative expenses
2012
2,606
2,837
5,443
2011
Increase
2,354
11%
2,612
4,966
9%
10%
Total other administrative expenses increased by £477,000 in the year, with a full year of Maintel Mobile costs
being incurred, against approximately 10 weeks in 2011. Other than this, administrative costs remained under
tight control, with the main movement from 2011 relating to the legal fees incurred in that year in respect of the
acquisition of Maintel Mobile.
Impairment and amortisation charges are discussed below.
The table below shows relevant headcount in relation to revenue.
Average Group headcount during the period
Average sales and service headcount
Average corporate and admin headcount
2012
182
69
23
Group revenue (£000)
28,171
25,914
* headcount figures exclude redundant Redstone employees in Q1 2011
2011*
Increase
181
61
23
1%
13%
-%
9%
Sales and service headcount has increased primarily due to the inclusion of Maintel Mobile employees for a full
year and the enhancement of the sales resource and customer service personnel referred to earlier.
Interest
Net interest receivable reduced from £23,000 to £9,000 in 2012, with average cash balances being lower in 2012
due to the initial payment in respect of the Maintel Mobile acquisition in October 2011 and the subsequent earnout
payment in October 2012, combined with the continuing low rates of interest achievable from acceptable financial
institutions.
Taxation
The consolidated statement of comprehensive income shows a tax rate of 74% (2011 – 32%). Each of the Group
companies is taxed at 24.5% (2011 – 26.5%, with the exception of Maintel Mobile which was taxed at 26%). Certain
recurring expenses that are disallowable for tax raise the effective rate above this. The rate is also inflated in
the year by the adjustment for the £2.834m contingent consideration relating to the Maintel Mobile acquisition;
excluding this the tax rate would be 24.6%. In 2011 the rate was inflated by (a) the £67,000 adjustment to the
Redstone consideration, (b) the £366,000 contingent consideration relating to the Maintel Mobile acquisition, and
(c) the £79,000 costs of the Maintel Mobile acquisition not being tax-relievable, together with a proportion of the
amortisation of the intangible relating to the District customer relationships.
Dividends
A final dividend for 2011 of 6.0p per share (£640,000 in total) was paid on 26 April 2012, and an interim dividend for
2012 of 6.3p (£672,000) was paid on 5 October 2012.
It is proposed to pay a final dividend of 7.3p in respect of 2012 on 25 April to shareholders on the register at the
close of business on 22 March, representing a 22% increase on the 2011 final dividend. The corresponding
ex-dividend date will be 20 March. In accordance with accounting standards, this dividend is not accounted for in
the financial statements for the period under review as it had not been committed as at 31 December 2012.
7
Business review (continued)
Consolidated statement of financial position
The consolidated statement of financial position remains sound, with £1.941m of cash (£900,000 of this payable to
the Maintel Mobile vendors on 3 January 2013 as described above) and no debt at 31 December 2012.
Adjusted net cash flows from operating activities grew significantly year on year, to £3.678m in 2012 (2011 -
£2.488m) and cash at the year end amounted to £1.941m (2011 - £2.953m). Cash flow movements are described
later in the business review.
Trade receivables have increased by £1.500m over the year, the main reason being the increased volume of
business being conducted with a partner typically on 60 day credit terms. Prepayments have increased by
£288,000 due largely to an increase in prepaid third party support contracts and accrued income relating to
equipment installations spanning the year end of which there were more than in previous years.
The value of maintenance stock has reduced by £14,000 in the year, to £578,000, the net result of purchases,
disposals and provisioning. The value of stock held for resale has fallen from £130,000 to £114,000 reflecting
different stages of invoicing and completion of the increased level of cross-period installations year to year.
Trade payables have increased by £1.332m since 31 December 2011, aided by delayed payments to three
suppliers and higher payables due to the increased Q4 equipment sales levels. Other tax and social security
liability has increased by £98,000 largely due to the VAT liability on the higher Q4 invoicing than in 2011.
Accruals have fallen £506,000 year on year, with two prior year accruals associated with the Maintel Mobile
acquisition – the £986,000 payment for net assets and the £366,000 accrual for contingent consideration –
having been paid during the year. This more than exceeds the new accruals for the final £900,000 contingent
consideration paid on 3 January 2013 having been established at 31 December 2012.
Deferred maintenance income has increased by £286,000, due mainly to the invoicing in mid-December of two
larger new contracts.
The Group corporation tax liability reduced by £343,000 year on year, to £665,000, with the payment during the
year of the accrued Maintel Mobile liability, that company previously not having to make payments on account.
No significant expenditure has been required on plant and equipment during the period, with additions again
broadly matching depreciation, the main expenditure having been on IT and routine office refurbishment.
Intangible assets
The Group has three intangible assets – (i) goodwill relating to the acquisition of Maintel Network Services
Limited, (ii) an intangible asset represented by customer contracts and relationships acquired from District
Holdings Limited, Callmaster Limited, Redstone and Maintel Mobile, (iii) goodwill relating to the District,
Redstone and Maintel Mobile acquisitions. At 31 December 2011, a fourth intangible asset was recognised,
being a licence for billing software which is now fully amortised; the software is now rented and is consequently
treated as an operating lease.
Goodwill of £1.026m (2011 - £1.026m) is carried in the consolidated statement of financial position, which is
subject to an impairment test at each reporting date. No impairment has been charged to the consolidated
statement of comprehensive income in 2012 (2011 - £Nil).
The intangible assets represented by purchased customer contracts and relationships were valued at £3.489m
at 31 December 2012 (2011 - £4.220m). These are subject to an amortisation charge of 17-20% of cost per annum
in respect of maintenance contract relationships, and 14.2% per annum in respect of network services contracts
and Maintel Mobile customer relationships, with £731,000 being amortised in 2012 (2011 - £491,000), the increase
attributable to the Maintel Mobile customer relationships acquired in October 2011.
The billing software licence was amortised over a three year period. The amortisation charge in the period was
£11,000 (2011 - £32,000), leaving a carrying value of £Nil (2011 - £11,000) at year end.
Cash flow
At 31 December 2012 the Group had cash and bank balances of £1.941m (2011 - £2.953m), unrestricted other than
£900,000 of this, representing the final payment due, on 3 January 2013, in respect of the acquisition of Maintel
Mobile.
Adjusted cash generated from operating activities before tax grew significantly in the year to £5.180m (2012
– £3.314m), with £1.312m paid in dividends, £1.502m in corporation tax, and £3.286m on the Maintel Mobile
acquisition and a net overall outflow of £1.012m in the year.
8
Annual report and
financial statements 2012
£2.3m was paid during the year in respect of contingent consideration relating to the acquisition of Maintel Mobile
and under accounting rules this has been expensed in the income statement. To arrive at a more meaningful
measure of cash generated from operating activities, in the Chairman’s statement and Business review this has
been added back to the cash flows shown in the statement of cash flows as follows:
Cash generated from operating activities
Net cash flows from operating activities
Unadjusted
Adjusted
£2.880m
£5.180m
£1.378m
£3.678m
The Group has no debt and invests its surplus cash with mainstream banking organisations.
The Group established a revolving credit facility of £1.5m in October 2011 with J D S Booth, the Group’s chairman,
however no monies have been drawn against this. Any amounts drawn would be unsecured, carry an interest
rate of 6.5 per cent and be repayable by 30 June 2013.
Outlook
Whilst we do not expect the challenging market conditions to abate in the short term, we have made good
progress during the year with the integration of mobile into our service offering and moving our business to
newer technologies. Alongside the recovery in H2 revenues and our return to organic growth during this period,
we are cautiously optimistic about the year ahead.
Through the strengthening of our sales resource we are well placed to continue to take advantage of our strategy
to realise the cross selling opportunity into our existing customer base. In addition, our partner business
continues to expand and is now well balanced across a number of major partners and technologies.
We remain alert and well positioned to consider further acquisitions in a market that we anticipate will see
further consolidation in 2013.
E Buxton
Chief Executive
8 March 2013
9
Board of directors
John Booth, 52
Non-executive chairman
Dale Todd, 54
Finance director
John was appointed chairman of Maintel in 1996. He
is also chairman of Integrated Asset Management plc
and Jazz FM. He acts as a non-executive director of
several other private companies and as a consultant
to Herald Venture Partners. John’s career has been
spent in equity investment and broking where he
has held various senior positions including Head
of Equities at Bankers Trust and co-founder and
executive chairman until 2011 of the Link Group which
was acquired by ICAP plc in 2008.
Eddie Buxton, 52
Chief Executive
Eddie was appointed chief executive in February 2009,
having previously been managing director of the
telecoms division of Redstone plc. Eddie has worked in
telecoms since 1995 including senior roles with Cable
and Wireless, NTL and Centrica Telecommunications.
Dale qualified as a chartered accountant with
Thomson McLintock (now KPMG) in 1982 and joined
the Group in March 2002. Prior to this he held
positions as group finance director at Rolfe & Nolan
Plc, Best International Group Plc and HS Publishing
Group Ltd.
Nicholas Taylor, 46
Non-executive director
Nicholas has extensive experience of working with
growing organisations, in both an executive and
non-executive capacity, principally in the media
and communications industries. He has held senior
positions in both private and public businesses and
in the not for profit sector. He is currently Managing
Director of The Imaginarium, an independent film
studio, and non-executive Chairman of Linstock
Communications, a public relations consultancy.
Angus McCaffery, 46
Sales and marketing director
Angus has over 20 years experience in the
telecommunications market, and co-founded Maintel
Europe in 1991, being appointed sales director of
Maintel Holdings in 1996. His role with the Group has
been to develop its sales, marketing and product
strategy.
10
Report on corporate governance
Annual report and
financial statements 2012
As a company listed on the Alternative Investment Market of the London Stock Exchange, Maintel Holdings Plc
is not required to comply with the UK Corporate Governance Code (“the Code”). However, the board of directors
recognises the importance of, and is committed to, ensuring that proper standards of corporate governance
operate throughout the Group and has taken steps to comply with it insofar as it can be applied practically, given
the size of the Group and the nature of its operations.
The directors have applied the principles and provisions of the Code in the following manner:
Board of directors
The board includes two non-executives - John Booth, who is chairman, and Nicholas Taylor. It is not
considered necessary, given the Company’s size and stage of development, to seek a further non-executive
director at this stage.
Other than in respect of their shareholdings in the Company, both non-executive directors are independent of
management and are free from any business or other relationship which could materially interfere with the
exercise of their independent judgement.
The board also consists of three executive directors, of whom Eddie Buxton is Chief Executive, Angus McCaffery
is Sales and Marketing Director and Dale Todd is Finance Director.
The directors’ biographies on page 10 demonstrate the range and depth of experience they bring to the Group.
The board meets regularly, normally monthly, and both reviews operations and assesses future strategy for
the three operating subsidiaries and for the Group as a whole. It operates to a schedule of matters specifically
reserved for its decision.
The Company’s articles of association require that Dale Todd retires by rotation at the forthcoming annual
general meeting and he offers himself for re-election at the meeting.
The Company has purchased insurance to cover its directors and officers against any costs they may incur in
defending themselves in any legal proceedings instigated against them as a direct result of duties carried out on
behalf of the Company.
The directors are able to seek independent professional advice as necessary, for the furtherance of their duties,
at the Company’s expense within designated financial limits.
The following committees deal with specific aspects of the Group’s affairs:
Audit committee
The audit committee is chaired by Nicholas Taylor with John Booth being the other member. Eddie Buxton,
Angus McCaffery and Dale Todd (who acts as secretary to the committee) attend meetings by invitation, as do the
external auditors.
The remit of the committee is to:
• consider the continued appointment of the external auditors, and their fees.
• liaise with the external auditors in relation to the nature and scope of the audit.
• review the financial statements and any other financial announcements issued by the Company.
• review any comments and recommendations received from the external auditors.
• review the Company’s statements on internal control systems and the policies and process for identifying and
assessing business risks and the management of those risks by the Company.
The audit committee convenes at least twice a year.
BDO LLP is retained to perform audit and audit-related work for the Group. The committee monitors the nature
and extent of non-audit work undertaken by the auditors, including reviewing the letter of independence provided
by the auditors annually which includes details of audit and non-audit work undertaken. The committee is
satisfied that there are adequate controls in place to ensure auditor independence and objectivity. Details of audit
and non-audit fees for the period under review are shown in note 6 of the financial statements.
11
Report on corporate governance (continued)
Remuneration committee
The remuneration committee is chaired by Nicholas Taylor, its other member being John Booth. The committee
meets at least once in respect of each financial year. The committee’s report to shareholders on directors’
remuneration is set out on page 14.
Nomination committee
The nomination committee had two members during 2012, both non-executive, being John Booth, chairman, and
Nicholas Taylor. The committee meets as required under the terms of its remit, which includes:
• reviewing the structure, size and composition of the board.
• identifying and nominating suitable candidates to fill vacancies on the board.
Board attendances
The following table shows attendance of the directors at meetings of the Board and the Remuneration and Audit
Committees during the year.
Number of
meetings in
the year
J Booth
E Buxton A McCaffery
N Taylor
D Todd
Board
Audit committee
Remuneration committee
15
2
2
14
1
2
15
2
-
15
1
-
14
2
2
14
2
-
Relationship with shareholders
The chairman’s statement and the Business review on pages 2 to 9 include a detailed review of the business and
future developments.
In addition to regular financial reporting, significant matters relating to trading or development of the business
are released to the market by way of Stock Exchange announcements as required.
The directors meet with institutional and other shareholders when possible, usually following the announcement
of the Company’s results, to keep them informed about the performance and objectives of the business.
The annual general meeting provides a further forum for shareholders to communicate with the board. Details of
resolutions to be proposed at the annual general meeting are set out in the notice of meeting on page 48.
Internal control
The board is ultimately responsible for the Group’s systems of internal control, and for reviewing their
effectiveness. Such systems can provide reasonable, but not absolute, assurance against material misstatement
or loss. The Board believes that the Group has internal control systems in place appropriate to the size and
nature of its business.
The directors do not consider that an internal audit function is required, given the size and nature of the business
at this time. This situation is reviewed annually.
The Group maintains a comprehensive process of financial reporting. The annual budget is reviewed and
approved by the board before being formally adopted, following which the board receives at least monthly
financial reports of the Group’s performance compared to the budget, with explanations of significant variances.
Monthly cash flow forecasts are provided to the board, as are budget reforecasts if deemed appropriate.
The executive directors monitor key performance indicators on a monthly basis, management of these being
delegated to the Group’s senior management.
The board undertakes a rolling review of known and potential risks, and addresses newly identified risks as they
arise, with controls put in place to minimise their potential effect on the Group.
Operating control
Each executive director has defined responsibility for specific aspects of the Group’s operations. The executive
directors, together with key senior executives, meet regularly to discuss day-to-day operational matters.
12
Annual report and
financial statements 2012
Investment appraisal
Capital expenditure is controlled via the budgetary process, the budget being approved by the board. Expenditure
is approved as required by the chief executive.
Risk management
The board is responsible for identifying the major business risks faced by the Group and for determining the
appropriate course of action to manage these risks. The Group’s approach to financial risk management is
further explained in note 17 to the financial statements.
Compliance statement
Although not subject to the Code given its AIM-listed status, the board considers that, where relevant, it has
adhered to the principles of the Code throughout the year, with the exception of not having a third non-executive
director.
Going concern
The Group’s business activities, together with factors likely to affect its future development, performance and
position, the financial position of the Group and its cash flows are set out in the Business review on pages 3 to 9.
The Group has sound financial resources, including a revolving credit facility to 30 June 2013 with a director,
Mr Booth, for up to £1.5m, and a substantial level of recurring revenue across a range of sectors and as a
consequence and after making enquiries, the directors have a reasonable expectation that the Company and the
Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they
continue to adopt the going concern basis in preparing the financial statements.
13
Report of the Remuneration committee
The committee consists of the two non-executive directors, Nicholas Taylor (chairman of the committee) and
John Booth.
The committee’s remit is to measure the performance of, and determine remuneration policy relating to directors
and certain senior employees, and has access to professional and other advice external to the Group. Taking
these factors into account, it then makes recommendations to the board.
Remuneration policy
The Group’s executive director remuneration policy is designed to attract and retain directors of the calibre required
to maintain the Group’s position in its marketplace.
The executive director remuneration package consists of up to four elements:
(a) Basic salary
An executive director’s basic salary is determined by the remuneration committee at the beginning of each year.
In deciding appropriate levels the committee considers the relative responsibilities of each of the directors.
Basic salaries were reviewed in January 2013 with increases of 1.5% being awarded.
Executive directors’ service agreements, which include details of remuneration, will be available for inspection at
the annual general meeting.
(b) Pension contributions and other benefits
Executive directors are entitled to employer pension contributions of 3% of basic salary, or additional salary in
lieu thereof.
They also receive a car allowance and membership of private health, permanent health and life assurance schemes.
(c) Bonus
The executive directors are eligible to receive bonuses, dependant on Group profitability and other performance
criteria.
(d) Share options
Eddie Buxton and Dale Todd have been granted share options, details of which are shown below.
Directors’ service agreements
Each executive director has a six month rolling service agreement.
Non-executive directors
Each of the non-executive directors has a three month rolling contract.
The remuneration of the non-executive directors is agreed by the executive directors, and is based upon the level of
fees paid at comparable companies. The non-executives receive no payment or benefits other than their fees.
Directors’ remuneration
The remuneration of the directors in office at 31 December 2012 was as follows:
J D S Booth
N J Taylor
E Buxton
A J McCaffery
W D Todd
Salaries/
fees
£000
Benefits
£000
Pension
Bonus contributions
£000
£000
Total
2012 (1)
£000
Total
2011 (1,2)
£000
34
20
138
158
140
490
-
-
12
19
12
43
-
-
35
12
18
65
-
-
4
4
-
8
34
20
189
193
170
606
33
20
188
187
178
606
(1) Excluding social security costs in respect of the above amounting to £78,000 (2011 - £74,000).
(2) Including bonuses of £82,000, employer pension contributions of £8,000 and benefits of £42,000, so that salaries amounted to £474,000.
The directors are the only employees of the Company.
14
Annual report and
financial statements 2012
Directors’ interests in ordinary shares
The directors’ interests in the ordinary shares of the Company are shown in the directors’ report on page 16.
Share options
On 18 May 2009 the directors of the Company approved the adoption of the Maintel Holdings Plc 2009 Option
Plan.
On the same date, the directors granted to Eddie Buxton, the Company’s Chief Executive Officer:
(a) an option over 53,909 shares, which has vested, with an exercise price of £1.00 per share.
(b) an option over the number of shares (if any, and to a maximum 107,818) that Mr Buxton acquired in the
market during the first year of his employment with the Company. Mr Buxton acquired no shares during the
requisite period and so this option lapsed during 2010.
(c) an option over 107,818 shares, which has vested, with an exercise price of £2.00 per share.
(d) an option over 107,818 shares, which vested on 3 January 2012, with an exercise price of £3.00 per share.
In each case, the option expires on 18 May 2019.
On 10 September 2009 the directors granted to Dale Todd, the Company’s Finance Director, an option over 10,000
shares, with an exercise price of 150.5p per share. The option vested and may be exercised from the date of
grant, and expires on 10 September 2019.
On 23 December 2009 the directors granted to Dale Todd an option over a further 10,000 shares, with an exercise
price of 145p per share. Mr Todd exercised this option on 25 May 2012.
On 11 March 2011 the directors granted to Dale Todd an option over a further 10,000 shares, with an exercise price
of 200p per share. The option vested and may be exercised from the date of grant, and expires on 11 March 2021.
On 21 December 2011 the directors granted to Dale Todd an option over a further 20,000 shares, with an
exercise price of 265p per share. The option vested and may be exercised from the date of grant, and expires
on 21 December 2021.
The following table illustrates the number and weighted average exercise prices (WAEP) of, and movements in,
share options during the year:
2012
Number
of options
2012
WAEP
2011
Number
of options
Outstanding at the beginning of the year
319,545
218p
289,545
Granted during the year
Exercised during the year
Outstanding at the end of the year
-
-
30,000
(10,000)
309,545
145p
220p
-
319,545
2011
WAEP
215p
243p
-
218p
The Company’s mid-market share price at 31 December 2012 was 342.5p per share, and the high and low prices
during the year were 431p and 302.5p respectively.
Share Incentive Plan
In 2006 the Company established the Maintel Holdings Plc Share Incentive Plan (“SIP”). The SIP is open to all
employees with at least 6 months’ continuous service with a Group company, and allows employees to subscribe
for existing shares in the Company at open market price out of their gross salary. The employees own the shares
from the date of purchase, but must continue to be employed by a Group company and hold their shares within
the SIP for 5 years to benefit from the full tax benefits of the plan.
The Report of the Remuneration committee was approved by the Board on 8 March 2013.
N J Taylor
Chairman of the Remuneration committee
15
Report of the directors for the year ended 31 December 2012
The directors present their annual report together with the audited financial statements for the year ended
31 December 2012.
Principal activities
The principal activities of the Group are the provision of contracted maintenance services, the sale and
installation of telecommunications systems and the provision of fixed line, mobile and data telecommunications
services, predominantly to the enterprise business sector.
Results and dividends
The consolidated statement of comprehensive income is set out on page 21 and shows the profit of the Group for
the year.
During the year the Company paid a final dividend of 6.0p per ordinary share in respect of the 2011 financial year,
amounting to £640,000 (2011 – 4.6p, amounting to £482,000), and an interim dividend in respect of 2012 of 6.3p
per share, amounting to £672,000 (2011 – 4.6p and £483,000 respectively). The directors propose the payment of
a final dividend in respect of 2012 of 7.3p per share. The cost of the proposed dividend, based on the number of
shares in issue as at 8 March 2013, is £779,000.
Business review
A review of the business and future developments of the Group is set out in the Business review on pages 3 to 9.
Directors
The directors of the Company as at 31 December 2012 and their interests in the ordinary shares of the Company
at that date were as follows:
Number of 1p ordinary shares
J D S Booth
E Buxton
A J McCaffery
N J Taylor
W D Todd
2012
Beneficial
2012
Non-beneficial
2011
2011
Beneficial Non-beneficial
2,758,272
-
2,757,672
-
3,204
76,202
2,759
71,363
2,053,845
-
2,168,310
14,062
16,157
72,344
73,249
13,499
5,622
-
67,623
68,500
J D S Booth is a shareholder in Herald Investment Trust plc which holds 760,000 1p ordinary shares in the
Company; this is in addition to Mr Booth’s beneficial holding above.
The non-beneficial holdings above relate to holdings of the Share Incentive Plan, of which the respective
directors are trustees.
Since the year end, the Share Incentive Plan has purchased a net 1,821 shares in total. There were no other
changes in the directors’ shareholdings between 31 December 2012 and 8 March 2013.
Details of the changes in the Company’s share capital during the year are given in note 19.
16
Annual report and
financial statements 2012
Substantial shareholders
In addition to the directors’ shareholdings, at 8 March 2013 the Company had been notified of the following
shareholdings of 3% or more in the ordinary share capital of the Company:
J A Spens
Herald Investment Trust plc
Octopus Investments Limited
Marlborough Special Situations Fund
T Wat
Alliance Trust Plc
Employees
Number of 1p ordinary
shares
% of issued
ordinary shares
1,573,100
760,000
631,920
532,500
340,203
325,575
14.7%
7.1%
5.9%
5.0%
3.2%
3.1%
Maintel’s success is dependent on the knowledge, experience and motivation of its employees, and so on the
attraction and retention of those staff. The Group’s management monitors the compliance with both statutory
regulation and best practice with regard to gender, race, age and disability.
A Group intranet is core to open communication amongst employees, and this continues to be developed.
The Company established a Share Incentive Plan in 2006, allowing employees to invest tax effectively in the its
shares, and so aligning employee interests with shareholders. Under the plan, shares are acquired by employees
out of pre-tax salary, with ownership vesting at that time, and are held by trustees on behalf of the employees.
The plan is therefore separate from the assets of the Group.
Environment
The Group acknowledges its responsibilities to environmental matters and where practicable adopts
environmentally sound policies in its working practices, such as recycling paper and packaging waste and using
specialist recyclers of scrap telecommunications and IT equipment. Maintel Europe Limited has ISO 14001:2004
accreditation for its environmental management systems.
Share capital
10,000 shares were issued during the year on the exercise of an option by Mr Todd.
No shares were repurchased during the year. The existing authority for the repurchase of the Company’s shares
is for the purchase of up to 1,598,620 shares. A fresh authority, for the purchase of up to 1,600,119 shares, will be
sought at the forthcoming annual general meeting.
Financial instruments
Details of the use of financial instruments by the Group are contained in note 17 of the financial statements.
Donations
The Group made charitable contributions of £1,000 (2011 – £1,000) during the year. No contributions were made
to political organisations (2011 - £Nil).
Creditor payment policy
The Group policy for suppliers is to fix terms of payment when agreeing the terms of transactions, and to comply
with those contractual arrangements. The Group’s average creditor payment period at 31 December 2012 was 57
days (2011 – 26 days). The Company’s average creditor payment period at 31 December 2012 was 3 days (2011 –
13 days), these figures being due to the irregular nature of the Company’s creditor payments.
Principal risks and uncertainties
The directors consider that the principal risks to the Group relate to technological advance, marketplace
relationships and pricing strategies, and the ongoing implications of the current economic environment.
17
Report of the directors for the year ended 31 December 2012 (continued)
Principal risks and uncertainties (continued)
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 replacement 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,
retaining the resultant enhanced calls and lines revenue and up-selling high value new products such as network
monitoring, software assurance and mobile services.
VoIP technology is a potential threat to the reselling of call minutes with a particular type of customer. Recognising
this potential risk, the Group has expanded its product portfolio to include SIP trunking and hosted IP technology. In
addition line rental and data revenues have continued to grow significantly during 2012. 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 these changes and the resultant effect on margins closely and take action
where appropriate.
The Group has a close partner relationship with O2/Telefonica (and to a diminishing extent Cable & Wireless
Worldwide), such that these companies constitutes a significant share of its maintenance base. Should the
relationships be terminated, the maintenance base would reduce to that extent over time, necessitating a
commensurate reduction in costs. Partnerships with other integrators have been developed which have begun to
reduce the percentage weighting.
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.
Maintel Mobile is a dealer for its suppliers, primarily Vodafone and O2, and is reliant on its contracts with those
companies. The Vodafone contract is for a term expiring, in normal circumstances, in August 2013 and the O2 contract
currently has no committed term. The company maintains strong relationships with its suppliers at various levels of the
business, as well as paying close attention to ensuring their expectations are met and, where possible, exceeded.
Although a significant element of Maintel Mobile’s revenues is recurring, the company’s growth has been reliant on
certain key individuals for their supplier and customer relationships and for their knowledge of the business. The
company has sought to mitigate this risk by improving its employees’ remuneration packages and extending the
knowledge of the business across employees of other companies in the Maintel group.
The pricing of Maintel Mobile’s products and services can be affected by regulatory bodies in the UK and the EU.
The company is also potentially subject to new pricing strategies by both competitors and suppliers, whether due to
their own internal policies or in response to technological change. The company mitigates these risks by assessing
anticipated regulations and pricing strategies and amending its own pricing policies accordingly.
Annual General Meeting
The Annual General Meeting of the company will be held at its offices on 22 April 2013 at 2.30pm.
Auditors
All of the current directors have taken all the steps that they ought to have taken to make themselves aware of any
information needed by the Company’s auditors for the purposes of their audit and to ensure that the auditors are
aware of that information. The directors are not aware of any relevant audit information of which the auditors are
unaware.
A resolution proposing the re-appointment of BDO LLP as auditors of the Company will be proposed at the
forthcoming annual general meeting.
On behalf of the Board
E Buxton
Director
8 March 2013
18
Statement of directors’ responsibilities
Annual report and
financial statements 2012
Directors’ responsibilities
The directors are responsible for preparing the annual report and the financial statements in accordance with
applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the
directors have elected to prepare the Group financial statements in accordance with International Financial
Reporting Standards (IFRSs) as adopted by the European Union and the Company financial statements in
accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting
Standards and applicable law). Under company law the directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company and
of the profit or loss of the Group for that period. The directors are also required to prepare financial statements
in accordance with the rules of the London Stock Exchange for companies trading securities on the Alternative
Investment Market.
In preparing these financial statements, the directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable and prudent;
• state whether they have been prepared in accordance with IFRSs as adopted by the European Union, subject to
any material departures disclosed and explained in the financial statements;
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the
Company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company
and enable them to ensure that the financial statements comply with the requirements of the Companies Act
2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable
steps for the prevention and detection of fraud and other irregularities.
Website publication
The directors are responsible for ensuring the annual report and the financial statements are made available
on a website. Financial statements are published on the Company’s website in accordance with legislation in
the United Kingdom governing the preparation and dissemination of financial statements, which may vary from
legislation in other jurisdictions. The maintenance and integrity of the Company’s website is the responsibility
of the directors. The directors’ responsibility also extends to the ongoing integrity of the financial statements
contained therein.
19
Independent auditors’ report to the
shareholders of Maintel Holdings Plc
We have audited the financial statements of Maintel Holdings Plc for the year ended 31 December 2012 which
comprise the consolidated statement of financial position and company balance sheet, the consolidated
statement of comprehensive income, the consolidated statement of cash flows, the consolidated statement
of changes in equity and the related notes. The financial reporting framework that has been applied in the
preparation of the consolidated financial statements is applicable law and International Financial Reporting
Standards (IFRSs) as adopted by the European Union. The financial reporting framework that has been applied
in preparation of the parent company financial statements is applicable law and United Kingdom Accounting
Standards (United Kingdom Generally Accepted Accounting Practice).
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members
those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the
company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the statement of directors’ responsibilities, the directors are responsible for
the preparation of the financial statements and for being satisfied that they give a true and fair view. Our
responsibility is to audit and express an opinion on the financial statements in accordance with applicable law
and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing
Practices Board’s (APB’s) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the APB’s website at
www.frc.org.uk/apb/scope/private.cfm.
Opinion on financial statements
In our opinion:
• the financial statements give a true and fair view of the state of the group’s and the parent company’s affairs as
at 31 December 2012 and of the group’s profit for the year then ended;
• the consolidated financial statements have been properly prepared in accordance with IFRSs as adopted by the
European Union;
• the parent company’s financial statements have been properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice; and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion the information given in the directors’ report for the financial year for which the financial
statements are prepared is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to
report to you if, in our opinion:
• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have
not been received from branches not visited by us; or
• the parent company financial statements are not in agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Anthony Perkins (senior statutory auditor)
For and on behalf of BDO LLP, statutory auditor
London
8 March 2013
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
20
Consolidated statement of comprehensive income
for the year ended 31 December 2012
Annual report and
financial statements 2012
Revenue
Cost of sales
Gross profit
Administrative expenses
Adjustment to contingent consideration
Contingent consideration treated as remuneration
Intangibles amortisation
Other administrative expenses
Operating profit
Financial income
Profit before taxation
Taxation
Profit and total comprehensive income attributable to owners of the parent
Earnings per share
Basic
Diluted
The notes on pages 25 to 42 form part of these financial statements.
Note
3
11
11
6
7
8
10
10
2012
£000
28,171
17,756
10,415
-
2,834
742
5,443
9,019
1,396
9
1,405
1,043
362
3.4p
3.4p
2011
£000
25,914
16,931
8,983
67
366
523
4,966
5,922
3,061
23
3,084
977
2,107
20.0p
19.9p
21
Consolidated statement of financial position
at 31 December 2012
Non current assets
Intangible assets
Property, plant and equipment
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Current liabilities
Trade and other payables
Current tax liabilities
Total current liabilities
Non current liabilities
Deferred tax liability
Total net assets
Equity
Issued share capital
Share premium
Capital redemption reserve
Retained earnings
Total equity
Note
2012
£000
692
5,793
1,941
11
13
14
15
16
18
19
20
20
20
2012
£000
4,515
216
4,731
8,426
13,157
9,203
665
9,868
581
2,708
107
1,028
31
1,542
2,708
2011
£000
722
4,019
2,953
2011
£000
5,257
224
5,481
7,694
13,175
7,827
1,008
8,835
697
3,643
107
1,013
31
2,492
3,643
The financial statements were approved and authorised for issue by the Board on 8 March 2013 and were signed on its behalf by:
W D Todd
Director
The notes on pages 25 to 42 form part of these financial statements.
22
Consolidated statement of changes in equity
for the year ended 31 December 2012
Annual report and
financial statements 2012
At 1 January 2011
Profit and total comprehensive income for year
Dividend
Issue of new ordinary shares
At 31 December 2011
Share
capital
£000
105
-
-
2
107
Profit and total comprehensive income for year
-
Dividend
Issue of new ordinary shares
At 31 December 2012
-
-
107
The notes on pages 25 to 42 form part of these financial statements.
Share
premium
£000
Capital
redemption
reserve
£000
Retained
earnings
£000
628
-
-
385
1,013
-
-
15
1,028
31
-
-
-
31
-
-
-
31
1,350
2,107
(965)
-
2,492
362
(1,312)
-
1,542
Total
£000
2,114
2,107
(965)
387
3,643
362
(1,312)
15
2,708
23
2012
£000
2011
£000
1,405
3,084
742
124
-
(9)
2,262
30
(1,774)
2,362
2,880
(1,502)
1,378
(116)
(986)
-
(986)
9
523
107
15
(23)
3,706
284
(109)
(567)
3,314
(826)
2,488
(125)
(2,435)
1,508
(927)
23
(1,093)
(1,029)
15
(1,312)
(1,297)
(1,012)
2,953
1,941
-
(965)
(965)
494
2,459
2,953
Consolidated statement of cash flows
for the year ended 31 December 2012
Operating activities
Profit before taxation
Adjustments for:
Intangibles amortisation
Depreciation charge
Loss on disposal of tangible fixed assets
Interest received
Operating cash flows before changes in working capital
Decrease in inventories
Increase in trade and other receivables
Increase/(decrease) in trade and other payables
Cash generated from operating activities
Tax paid
Net cash flows from operating activities
Investing activities
Purchase of plant and equipment
Purchase price in respect of business combination
Net cash acquired with subsidiary undertaking
Interest received
Net cash flows from investing activities
Financing activities
Issue of new ordinary shares
Equity dividends paid
Net cash flows from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at start of period
Cash and cash equivalents at end of period
The notes on pages 25 to 42 form part of these financial statements
24
Notes forming part of the financial statements
for the year ended 31 December 2012
Annual report and
financial statements 2012
1 General information
Maintel Holdings Plc is a public limited company incorporated and domiciled in the UK, whose shares are publicly traded on the Alternative
Investment Market (AIM). Its registered office and principal place of business is 61 Webber Street, London SE1 0RF.
2 Accounting policies
The principal policies adopted in the preparation of the consolidated financial statements are as follows:
(a) Basis of preparation
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards, International
Accounting Standards and Interpretations (collectively IFRS) issued by the International Accounting Standards Board (IASB) as adopted by
the European Union (“adopted IFRSs”), and with those parts of the Companies Act 2006 applicable to companies preparing their accounts in
accordance with adopted IFRSs. The Company has elected to prepare its parent company financial statements in accordance with UK GAAP and
these are presented on page 43.
(b) Basis of consolidation
The financial statements consolidate the results of Maintel Holdings Plc and each of its subsidiaries (the “Group”). The results of subsidiaries
acquired are included within the consolidated statement of comprehensive income and consolidated statement of financial position from
the effective date of acquisition. Uniform accounting policies are adopted in each subsidiary for the purposes of consolidation. The results of
disposed subsidiaries are included in the statement of comprehensive income up to the effective date of disposal. All intra-group transactions
and balances are eliminated on consolidation. Acquisitions are accounted for using the acquisition method of accounting.
Subsidiaries are all entities over which the Group has the power to govern their financial and operating policies.
As permitted by IFRS 1, business combinations prior to 1 January 2006 have not been restated under an IFRS basis.
(c) Revenue
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and can be reliably measured.
Revenue represents sales to customers at invoiced amounts and commissions receivable from suppliers, less value added tax. Revenue from
sales of equipment, chargeable works carried out and network services, is recognised when the goods or services are provided. Amounts
invoiced in advance in respect of maintenance contracts are deferred and released to the statement of comprehensive income on a straight
line basis over the period covered by the invoice. Connection commissions received from mobile network operators are recognised (a) where
commission is payable in advance, when the customer contract has been accepted by the network operator and is therefore legally binding,
less an allowance for expected future clawbacks, and (b) where commission is payable on a monthly basis, in the month to which commission
relates. Interest income is recognised on an accruals basis.
(d) Intangible assets
Goodwill
Goodwill represents the excess of the fair value of the consideration of a business combination over the acquisition date fair value of the
identifiable assets, liabilities and contingent liabilities acquired.
For business combinations completed prior to 1 January 2010, the fair value of the consideration comprises the fair value of assets given, plus
any direct costs of acquisition.
For business combinations completed on or after 1 January 2010, the fair value of the consideration comprises the fair value of assets given.
Contingent consideration is included in cost at its acquisition date fair value and, in the case of contingent consideration classified as a financial
liability, remeasured subsequently through profit or loss. For business combinations completed on or after 1 January 2010, direct costs of
acquisition are recognised immediately as an expense.
Goodwill is capitalised as an intangible asset and carried at cost with any impairment in carrying value being charged to the consolidated
statement of comprehensive income.
Other intangible assets
Intangible assets are stated at cost, or fair value where acquired through a business combination, less accumulated amortisation and consist
of customer relationships and software licences, the latter having expired during the year. Where these assets have been acquired through a
business combination, the cost will be the fair value allocated in the acquisition accounting; where they have been acquired other than through a
business combination, the initial cost is the aggregate amount paid and the fair value of any other consideration given to acquire the asset.
Customer relationships are amortised over their estimated useful lives of (i) five or six years in respect of maintenance contracts, (ii) seven years
in respect of network services and mobile contracts. Software licences are amortised over the three year period of the licence, and were fully
amortised and expired during the year.
25
Notes forming part of the financial statements for the year ended 31 December 2012 (continued)
2 Accounting policies (continued)
(e) Impairment of non-current assets
Impairment tests on goodwill are undertaken annually on 31 December. Customer relationships and other assets are subject to impairment
tests whenever events or changes in circumstances indicate the carrying amount may not be recoverable. Where the carrying value of an asset
exceeds its recoverable amount (being the higher of value in use and fair value less costs to sell), the asset is written down accordingly through
the consolidated statement of comprehensive income.
Where it is not possible to estimate the recoverable amount of an individual asset, the impairment test is carried out on the asset’s cash-
generating unit (being the lowest group of assets in which the asset belongs for which there are separately identifiable cash flows). Goodwill is
allocated on initial recognition to each of the Group’s cash-generating units that are expected to benefit from the synergies of the combination
giving rise to goodwill.
Impairment charges are included in the administrative expenses line item in the consolidated statement of comprehensive income and, in
respect of goodwill impairments, are never reversed.
(f) Property, plant and equipment
Property, plant and equipment is stated at cost, less accumulated depreciation and any impairment in value. Depreciation is provided to write off
the cost, less estimated residual values, of all tangible fixed assets over their expected useful lives, at the following rates:
Office and computer equipment
25% straight line
Leasehold improvements
over the remaining period of the lease
(g) Inventories
Inventories comprise (i) maintenance stock, being replacement parts held to service customers’ telecommunications systems, and (ii) stock held
for resale, being stock purchased for customer orders which has not been installed at the end of the financial period. Inventories are valued at
the lower of cost and net realisable value.
(h) Cash and cash equivalents
Cash and cash equivalents comprise cash balances and short term deposits with an original maturity of three months or less.
(i) Taxation
Current tax is the expected tax payable on the taxable income for the year, together with any adjustments to tax payable in respect of previous
years.
Deferred tax is provided using the liability method, providing for temporary differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for taxation purposes, except for differences arising on:
• the initial recognition of goodwill;
• the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects
neither accounting nor taxable profit; and
• investments in subsidiaries where the Group is able to control the timing of the reversal of the difference and it is probable that the difference
will not reverse in the foreseeable future.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be
utilised.
The amount of the deferred tax asset or liability is determined using tax rates that have been enacted or substantively enacted by the date of the
consolidated statement of financial position and are expected to apply when the deferred tax assets/liabilities are recovered/settled.
Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current tax assets and liabilities and the
deferred tax assets and liabilities relate to taxes levied by the same tax authority on either:
• the same taxable Group company; or
• different Group entities which intend either to settle current tax assets and liabilities on a net basis, or to realise the assets and settle the
liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities are expected to be settled or
recovered.
26
Annual report and
financial statements 2012
(j) Financial assets and liabilities
The Group’s financial assets and liabilities mainly comprise cash, trade and other receivables and trade and other payables.
Cash comprises cash in hand and deposits held at call with banks.
Trade and other receivables are not interest bearing and are stated at their nominal value as reduced by appropriate allowances for
irrecoverable amounts or additional costs required to effect recovery.
Trade and other payables are not interest bearing and are stated at their nominal amount.
(k) Operating leases
Annual rentals payable are charged to the consolidated statement of comprehensive income on a straight-line basis over the term of the lease.
(l) Employee benefits
The Group contributes to a number of defined contribution pension schemes in respect of certain of its employees. The amount charged in the
statement of comprehensive income represents the employer contributions payable to the schemes in respect of the financial period. The assets
of the schemes are held separately from those of the Group in independently administered funds.
The cost of all short term employee benefits is recognised during the period the employee service is rendered.
Holiday pay is expensed in the period in which it accrues.
(m) Dividends
Dividends unpaid at the reporting date are only recognised as a liability at that date to the extent that they are appropriately authorised and
are no longer at the discretion of the Company. Proposed but unpaid dividends that do not meet these criteria are disclosed in the notes to the
financial statements.
(n) Accounting standards issued
There are no impending IFRSs that are expected to have a material effect on the Group’s financial statements.
(o) Contingent consideration
Where payment of contingent consideration in respect of a business combination or acquisition of business and assets is dependent on the
continued employment by the Group of the seller(s), the estimated contingent consideration is pro rated in accordance with the period of
employment required of the seller and this amount is expensed in the income statement.
27
Notes forming part of the financial statements for the year ended 31 December 2012 (continued)
3 Segment information
For management reporting purposes and operationally, the Group consists of three business segments: (i) telephone maintenance and
equipment sales, (ii) telephone network services, and (iii) mobile services (this division having been acquired 21 October 2011). Each segment
applies its respective resources across inter-related revenue streams which are reviewed by management collectively under these headings.
The businesses of each segment and a further analysis of revenue are described under their respective headings in the Business review.
Maintenance
and
equipment
£000
18,681
Network
services
£000
6,730
3,272
(264)
3,008
-
3,008
983
(59)
924
-
924
Mobile
£000
2,941
813
-
813
-
813
Year ended 31 December 2012
Revenue
Operating profit before customer
relationship and software intangibles
amortisation and adjustments
Customer relationship and
software intangibles amortisation
Operating profit before adjustments
Contingent consideration treated as
remuneration (note 11)
Operating profit
Interest (net)
Profit before taxation
Taxation
Profit and total comprehensive income for the period
Central/
inter-
company
£000
(181)
Total
£000
28,171
(96)
4,972
(419)
(515)
(2,834)
(3,349)
(742)
4,230
(2,834)
1,396
9
1,405
(1,043)
362
Revenue is wholly attributable to the principal activities of the Group and other than sales of £23,000 (2011 - £20,000) to other EU countries
arises predominantly within the United Kingdom.
Maintenance and equipment revenue consists of maintenance related revenue of £12.246m and equipment, installation and other revenue of
£6.435m (2011 - £12.948m and £6.492m). Network services revenue consists of call traffic revenue of £2.656m, line rental revenue of £2.979m,
data services revenue of £0.799m and other revenue of £0.296m (2011 - £2.613m, £2.457m, £0.660m and £0.306m). Mobile revenue consists
principally of commissions receivable from network operators.
Intercompany trading consists of telecommunications services, and recharges of sales, engineering and rent costs, £90,000 (2011 - £48,000)
attributable to the Maintenance and equipment segment, £85,000 (2011 - £115,000) to the Network services segment and £6,000 (2011 - £Nil) to
the Mobile division.
In 2012 the Group had one customer (2011 - One) which accounted for more than 10% of its revenue, totalling £3.184m (2011 - £5.021m).
The Board does not regularly review the aggregate assets and liabilities of the Company and its subsidiaries and accordingly an analysis of these
is not provided.
Maintenance
and
equipment
£000
113
121
264
Network
services
£000
-
-
59
Central/
inter-
company
£000
-
-
419
Mobile
£000
2
3
-
Total
£000
115
124
742
Year ended 31 December 2012
Other
Capital expenditure
Depreciation
Amortisation
28
Year ended 31 December 2011
Segment revenue before adjustment
Redstone deferred income less costs
Revenue
Operating profit before customer
relationship and software intangibles
amortisation and adjustments
Customer relationship and
software intangibles amortisation
Operating profit before adjustments
Adjustment to contingent
consideration
Redstone deferred income less costs
Contingent consideration treated
as remuneration (note 11)
Maintenance
and
equipment
£000
19,299
141
19,440
Network
services
£000
6,036
-
6,036
3,008
(273)
2,735
-
141
-
-
793
(80)
713
-
-
-
-
Mobile
£000
601
-
601
171
-
171
-
-
-
-
Costs relating to acquisition of Maintel Mobile
Operating profit
Interest (net)
Profit before taxation
Taxation
Profit and total comprehensive income for the period
Other
Capital expenditure
Depreciation
Amortisation
2,876
713
171
125
106
273
-
-
80
-
1
-
Annual report and
financial statements 2012
Central/
inter-
company
£000
(163)
-
(163)
Total
£000
25,773
141
25,914
(17)
3,955
(170)
(187)
(67)
-
(366)
(79)
(699)
-
-
170
(523)
3,432
(67)
141
(366)
(79)
3,061
23
3,084
(977)
2,107
125
107
523
29
Notes forming part of the financial statements for the year ended 31 December 2012 (continued)
4 Employees
The average number of employees, including directors, during the year was:
2012
Number
2011
Number
Corporate and administration
Sales and customer service
Technical and engineering
Staff costs, including directors, consist of:
Wages and salaries
Social security costs
Pension costs
23
69
90
182
2012
£000
8,698
1,031
150
9,879
23
61
97
181
2011
£000
8,529
998
152
9,679
In addition to the above, the comprehensive income statement includes £2.834m of contingent consideration in respect of the Maintel Mobile
acquisition which is treated as a remuneration expense (2011 - £366,000) (see note 11).
The Group makes contributions to defined contribution personal pension schemes for employees and directors. The assets of the schemes are
separate from those of the Group. Pension contributions totalling £25,000 (2011 - £26,000) were payable to the schemes at the year end and are
included in other payables.
5 Directors’ remuneration
The remuneration of the Company directors was as follows:
Directors’ emoluments
Pension contributions
Included in the above is the remuneration of the highest paid director as follows:
Directors’ emoluments
Pension contributions
2012
£000
598
8
606
189
4
193
2011
£000
598
8
606
184
4
188
The Group paid contributions into defined contribution personal pension schemes in respect of 2 (2011 – 2) directors during the year.
30
6 Operating profit
This has been arrived at after charging:
Depreciation of property, plant and equipment
Amortisation of intangible fixed assets
Loss on disposal of tangible fixed assets
Operating lease rentals
- property
- plant and machinery
Fees payable to the Company’s auditor for the audit of the Company’s annual accounts
Fees payable to the Company’s auditor and its associates for other services:
- audit of the Company’s subsidiaries pursuant to legislation
- audit-related assurance services
- tax compliance services
7 Financial income
Bank and other interest received
8 Taxation
UK corporation tax
Corporation tax on profits of the period
Prior year adjustment
Deferred tax
Taxation on profit on ordinary activities
Annual report and
financial statements 2012
2012
£000
2011
£000
124
742
-
171
82
8
63
11
4
2012
£000
9
2012
£000
1,159
-
1,159
(116)
1,043
107
523
15
157
89
8
61
16
4
2011
£000
23
2011
£000
1,005
5
1,010
(33)
977
31
Notes forming part of the financial statements for the year ended 31 December 2012 (continued)
8 Taxation (continued)
The differences between the total tax shown above and the amount calculated by applying the standard rate of UK corporation tax to the profit
before tax are as follows:
Profit before tax
Profit at the standard rate of corporation tax in the UK
of 24.5% (2011 – 26.5%)
Effect of:
Expenses not deductible for tax purposes
Intangible amortisation not attracting tax relief
No tax relief on contingent consideration treated as remuneration (note 11)
Prior year adjustment
Other timing differences
9 Dividends paid on ordinary shares
Final 2010, paid 28 April 2011 – 4.6p per share
Interim 2011, paid 7 October 2011 – 4.6p per share
Final 2011, paid 26 April 2012 – 6.0p per share
Interim 2012, paid 5 October 2012 – 6.3p per share
2012
£000
1,405
2011
£000
3,084
345
817
11
-
694
-
(7)
38
16
97
5
4
1,043
977
2012
£000
-
-
640
672
1,312
2011
£000
482
483
-
-
965
The directors propose the payment of a final dividend for 2012 of 7.3p (2011 – 6.0p) per ordinary share, payable on 25 April 2013 to shareholders
on the register at 22 March 2013. The cost of the proposed dividend, based on the number of shares in issue as at 8 March 2013, is £779,000
(2011 - £640,000).
10 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:
Earnings used in basic and diluted EPS, being profit after tax
Adjustments:
Amortisation of intangibles
Non-trading accounting adjustments re Redstone acquisition
Adjustment to Redstone contingent consideration
Contingent consideration treated as remuneration (note 11)
Costs relating to the acquisition of Maintel Mobile
Tax relating to above adjustments
Adjusted earnings used in adjusted EPS
32
2012
£000
362
731
-
-
2,834
-
(185)
3,742
2011
£000
2,107
491
(141)
67
366
79
(76)
2,893
10 Earnings per share (continued)
Weighted average number of ordinary shares of 1p each
Potentially dilutive shares
Earnings per share
Basic
Basic and diluted
Adjusted – basic but after the adjustments in the table above
Adjusted – basic and diluted after the adjustments in the table above
Annual report and
financial statements 2012
2012
Number
(000s)
10,671
121
10,792
3.4p
3.4p
35.1p
34.7p
2011
Number
(000s)
10,521
41
10,562
20.0p
19.9p
27.5p
27.4p
The adjustments above have been made in order to provide a clearer picture of the trading performance of the Group.
The two adjustments in 2011 relating to Redstone are adjustments to revenue and costs in respect of the acquisition of business and assets
during 2010.
On 25 May 2012 the Company issued 10,000 ordinary shares under the 2009 Share Option Plan.
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 potentially dilutive 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.
11 Intangible assets
Cost
At 1 January 2011
Acquired in the year
At 31 December 2011
Disposed of in the year
At 31 December 2012
Amortisation and impairment
At 1 January 2011
Amortisation in the year
At 31 December 2011
Amortisation in the year
In respect of disposals in the year
At 31 December 2012
Net book value
At 31 December 2012
At 31 December 2011
Goodwill
£000
Customer
relationships
£000
Computer
software
£000
792
551
1,343
-
1,343
317
-
317
-
-
317
1,026
1,026
2,861
2,998
5,859
-
5,859
1,148
491
1,639
731
-
2,370
3,489
4,220
91
-
91
(91)
-
48
32
80
11
(91)
-
-
11
Total
£000
3,744
3,549
7,293
(91)
7,202
1,513
523
2,036
742
(91)
2,687
4,515
5,257
33
Notes forming part of the financial statements for the year ended 31 December 2012 (continued)
11 Intangible assets (continued)
On 21 October 2011 the Company acquired the entire share capital of Totility Limited (renamed Maintel Mobile Limited) at the following
valuations:
Purchase consideration
Cash – initial consideration
Cash – in respect of net assets acquired
Ordinary shares (177,778 shares at 1p nominal value and 216.5p share premium per share)
Total consideration
Assets and liabilities acquired
Tangible fixed assets
Stock held for resale
Trade receivables
Other receivables
Prepayments and accrued income
Cash
Trade payables
Corporation tax liability
Other taxes and social security
Other payables
Accruals and deferred income
Customer relationships
Deferred tax on customer relationships
Total assets and liabilities acquired
Goodwill
£000
2,435
986
387
3,808
19
5
274
23
52
1,508
(90)
(458)
(127)
(218)
(2)
986
2,998
(727)
3,257
551
Maintel Mobile was acquired to complement the Group’s existing offerings of telecommunications and data services and enable further
cross-selling to and from other Group operations.
The customer relationships are estimated to have a useful life of seven years based on the directors’ experience of comparable contracts
and are therefore amortised over that period and are subject to an annual impairment review. A deferred tax liability of £727,000 has been
recognised above which is being credited to the income statement pro rata to the amortisation of the customer relationships. The amortisation
charge in 2012 is £428,000 (2011 - £83,000).
As described in the Business review, contingent consideration was payable on the acquisition of Maintel Mobile, which was agreed in July 2012,
with £2.3m having been paid during the year and a final £0.9m paid in January 2013, £2.834m being expensed in 2012 and £366,000 in 2011.
Software licence
A three year licence of billing software was purchased in 2009, at a cost of £91,000. The licence is amortised over this period and became fully
amortised during the year when the licence expired. The software is now rented and so the intangible asset represented by the software has
been deemed disposed of.
Amortisation charges for the year have been charged through administrative expenses in the statement of comprehensive income.
34
11 Intangible assets (continued)
Goodwill
The carrying value of goodwill is allocated to the cash generating units as follows:
Maintel Voice and Data Limited
Maintel Europe Limited
Maintel Mobile Limited (previously Totility Limited)
Annual report and
financial statements 2012
2012
£000
202
273
551
2011
£000
202
273
551
1,026
1,026
Goodwill of £227,000 arising on the acquisition of Pinnacle Voice and Data Limited (since renamed Maintel Network Solutions Limited) in
December 2005 was capitalised at 31 December 2005, as was the related deferred payment of £147,000 in 2006, the aggregate being subject to
an annual impairment review which has resulted in no charge in 2012 (2011 - £Nil) and a carrying value of £202,000.
Goodwill of £290,000 arose on the acquisition of District Holdings Limited in June 2006. This is assessed for impairment at the date of each
consolidated statement of financial position. There has been no impairment of the goodwill in 2012 (2011 - £Nil) and the carrying value is
£145,000.
Goodwill of £128,000 arose on the Redstone acquisition in October 2010. This is assessed for impairment at the date of each consolidated
statement of financial position. There has been no impairment of the goodwill in 2012 (2011 - £Nil) and the carrying value is £128,000.
Goodwill of £551,000 arose on the Maintel Mobile acquisition in October 2011. This is assessed for impairment at the date of each consolidated
statement of financial position. There has been no impairment of the goodwill in 2012 (2011 - £Nil) and the carrying value is £551,000.
For the purposes of the impairment review of goodwill, the net present value of the projected future cash flows of the relevant cash generating
unit are compared with the carrying value. Projected operating margins for this purpose are based on a five year horizon and 3% rate of growth,
and a discount rate of 10% is applied to the resultant projected cash flows; the discount rate is based on conventional capital asset pricing model
inputs.
£195,000 (gross) of the Goodwill in the balance sheet of Maintel Europe Limited is eligible for tax relief, with relief being claimed against £10,000
of amortisation in 2012 (2011 - £10,000), leaving a net balance of £175,000 available for future tax relief.
12 Subsidiaries
The Group consists of Maintel Holdings Plc and its subsidiary undertakings, including several which did not trade during the year. The following
were the principal subsidiary undertakings at the end of the year and each has been included in the consolidated financial statements:
Maintel Europe Limited
Maintel Voice and Data Limited
Maintel Mobile Limited (previously Totility Limited)
Each is wholly owned and incorporated in England and Wales.
35
Notes forming part of the financial statements for the year ended 31 December 2012 (continued)
13 Property, plant and equipment
Cost or valuation
At 1 January 2011
Additions
On acquisition of Maintel Mobile
Disposals
At 31 December 2011
Additions
Disposals
At 31 December 2012
Depreciation
At 1 January 2011
Provided in year
On acquisition of Maintel Mobile
Disposals
At 31 December 2011
Provided in year
Disposals
At 31 December 2012
Net book value
At 31 December 2012
At 31 December 2011
14 Inventories
Maintenance stock
Stock held for resale
Leasehold
improvements
£000
Office and
computer
equipment
£000
96
41
32
(32)
137
23
-
160
72
15
17
(17)
87
25
-
112
48
50
856
84
18
(50)
908
93
(31)
970
678
92
14
(50)
734
99
(31)
802
168
174
2012
£000
578
114
692
Total
£000
952
125
50
(82)
1,045
116
(31)
1,130
750
107
31
(67)
821
124
(31)
914
216
224
2011
£000
592
130
722
Cost of inventories recognised as an expense
4,144
2,976
Provisions of £47,000 were made against the Maintenance stock in 2012, (2011 - £64,000), with no reversal of provisions having been made in
either year. The directors have noted that the cost of inventories recognised as an expense in 2011 was incorrectly stated at £3.568m, and this
has been corrected above. This has no effect on any other part of the financial statements.
36
15 Trade and other receivables
Trade receivables
Other receivables
Prepayments and accrued income
All amounts shown above fall due for payment within one year.
16 Trade and other payables
Trade payables
Other tax and social security
Accruals
Other payables
Deferred maintenance income
Other deferred income
Annual report and
financial statements 2012
2012
£000
3,997
11
1,785
5,793
2012
£000
2,421
936
1,618
416
3,780
32
9,203
2011
£000
2,497
25
1,497
4,019
2011
£000
1,089
838
2,124
250
3,491
35
7,827
Deferred maintenance income relates to the unearned element of maintenance revenue that has been invoiced but not yet recognised in the
consolidated statement of comprehensive income. Other deferred income relates to other amounts invoiced but not yet recognised in the
consolidated statement of comprehensive income.
37
Notes forming part of the financial statements for the year ended 31 December 2012 (continued)
17 Financial instruments
The Group’s financial assets and liabilities mainly comprise cash, trade and other receivables and trade and other payables, with smaller
balances being recorded as other debtors and other creditors.
Current financial assets
Trade receivables
Cash and cash equivalents
Other receivables
Current financial liabilities
Trade payables
Other payables
Loans and receivables
2011
2012
£000
£000
3,997
1,941
11
5,949
2,497
2,953
25
5,475
Financial liabilities measured
at amortised cost
2011
£000
2012
£000
2,421
416
2,837
1,089
250
1,339
The maximum credit risk for each of the above is the carrying value stated above. The main risks arising from the Group’s operations are credit
risk, currency risk and interest rate risk, however other risks are also considered below.
Credit risk
Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis and with increased rigour in light of the
current economic climate. Credit evaluations are performed on customers as deemed necessary based on, inter alia, the nature of the prospect
and size of order. The Group does not require collateral in respect of financial assets.
At the reporting date, the largest exposure other than cash was represented by the carrying value of trade and other receivables, against which
£136,000 is provided at 31 December 2012 (2011 - £139,000). The provision represents an estimate of potential bad debt, goodwill credits and
additional costs to completion to be incurred in respect of the year end trade receivables, a review having been undertaken of each such year
end receivable. The largest individual receivable included in trade and other receivables at 31 December 2012 owed the Group £1.8m including
VAT (2011 - £163,000).
The movement on the provision is as follows:
2012
£000
139
(60)
57
136
2011
£000
120
(29)
48
139
Provision at start of year
Provision used
Additional provision made
Provision at end of year
38
Annual report and
financial statements 2012
A debt is considered to be bad when it is deemed irrecoverable, for example when the debtor goes into liquidation, or when a credit or partial
credit is issued to the customer for goodwill or commercial reasons.
The Group had past due trade receivables not requiring impairment as follows:
Up to 30 days overdue
31-60 days overdue
More than 60 days overdue
2012
£000
1,289
302
(35)
1,556
2011
£000
795
298
60
1,153
Cash and cash equivalents at 2012 and 2011 year ends represented short term deposits with LloydsTSB, Santander and Barclays.
Foreign currency risk
The functional currency of all Group companies is Sterling. The Group engages in minimal foreign currency transactions, and maintains a Euro
bank account to facilitate these. The balance of the account at 31 December 2012 was less than £1,000 (2011 – £1,000). The Group therefore has
no exposure to currency risk.
Interest rate risk
The Group has no borrowings, and invests its surplus cash in short term bank deposits at prevailing rates of interest. The Group’s interest
income (£9,000 in 2012, and £23,000 in 2011) is therefore dependent on those prevailing rates, which were at a historically low level during 2012
and 2011.
Liquidity risk
The Group’s main financial liabilities are trade payables, which fall due and are typically paid in accordance with their contractual terms which
are typically 30 days; payment of these is dependent on the Group’s liquidity, which in turn is dependent on management of the Group’s working
capital. The directors are conscious of the likelihood that pressures may continue to be exerted on working capital as a result of the current
economic environment however these have been, and will continue to be minimised wherever possible, including by way of additional credit
checking of prospective customers and tighter monitoring of debtors.
Market risk
As noted above, the interest earned on short term deposits is dependent on the prevailing rates of interest from time to time.
Fair value
All of the Group’s financial instruments are due to mature within one year and are subject to normal commercial credit and interest rate risk.
There is no significant difference between the carrying amounts shown in the consolidated statement of financial position and the fair values of
the Group’s financial instruments.
Capital risk management
The Group’s objective when managing capital is to safeguard its ability to continue as a going concern in order to provide returns to
shareholders. Capital comprises all components of equity – share capital, capital redemption reserve, share premium and retained earnings.
Typically returns to shareholders will be funded from retained profits, however in order to take advantage of the opportunities available to
it from time to time, the Group will consider the appropriateness of issuing shares, repurchasing shares, amending its dividend policy and
borrowing, as is deemed appropriate in the light of such opportunities and changing economic circumstances.
39
Notes forming part of the financial statements for the year ended 31 December 2012 (continued)
18 Deferred tax liability
At 1 January 2011
Liability established against intangible
assets acquired during the year
Charge/(credit) to consolidated statement
of comprehensive income
At 31 December 2011
Charge/(credit) to consolidated statement
of comprehensive income
At 31 December 2012
Property,
plant and
equipment
£000
Intangible
assets
£000
(6)
-
13
7
(8)
(1)
9
727
(31)
705
(111)
594
Other
£000
-
-
(15)
(15)
3
(12)
Total
£000
3
727
(33)
697
(116)
581
The deferred tax liability represents (a) a liability established under IFRS on the recognition of an intangible asset in relation to the Maintel
Mobile acquisition, and (b) an asset represented by depreciation provided in the accounts in excess of the tax value of capital allowances
claimed, and is calculated using the tax rates at which the liabilities are expected to reverse.
19 Share capital
Authorised
17,571,840 ordinary shares of 1p each
Allotted, called up and fully paid
10,674,578 (2011 - 10,664,578) ordinary shares of 1p each
10,000 shares were issued during the year, under the 2009 Share Option Plan.
2012
£000
176
107
2011
£000
176
107
20 Reserves
Share capital, share premium and retained earnings represent balances conventionally attributed to those descriptions.
The capital redemption reserve represents the nominal value of ordinary shares repurchased and cancelled by the Company and is
undistributable in normal circumstances.
The Group having no borrowings or regulatory capital requirements, its primary capital management focus is on maximising earnings per share
and therefore shareholder return.
The directors propose the payment of a final dividend in respect of 2012 of 7.3p per share; this dividend is not provided for in these financial
statements.
21 Share Incentive Plan
The Company established the Maintel Holdings Plc Share Incentive Plan (“SIP”) in 2006. The SIP is open to all employees with at least 6 months’
continuous service with a Group company, and allows employees to subscribe for existing shares in the Company out of their gross salary. The
shares are bought by the SIP on the open market. The employees own the shares from the date of purchase, but must continue to be employed
by a Group company and hold their shares within the SIP for 5 years to benefit from the full tax benefits of the plan.
40
Annual report and
financial statements 2012
22 Share based payments
On 18 May 2009 the directors of the Company approved the adoption of the Maintel Holdings Plc 2009 Option Plan.
The Remuneration Committee’s report on page 14 describes the options granted over the Company’s ordinary shares.
In aggregate, options are outstanding over 2.9% of the current issued share capital. The number of shares under option and the vesting and
exercise prices may be adjusted at the discretion of the Remuneration Committee in the event of a variation in the issued share capital of the
Company.
23 Operating leases
As at 31 December 2012, the Group had future minimum rentals payable under non-cancellable operating leases as set out below:
The total future minimum lease payments are due as follow:
Not later than one year
Later than one year and not later than five years
2012
Land and
buildings
£000
164
118
282
2012
Other
£000
93
19
112
2011
Land and
buildings
£000
158
39
197
2011
Other
£000
67
53
120
The commitment relating to land and buildings is primarily in respect of the Group’s London offices, the lease on which expires in September
2014 in normal circumstances, at an annual rental of £149,550. The remaining commitment relates to other property, contract hired motor
vehicles (which are typically replaced on a 3 year rolling cycle), and licencing of billing software.
24 Related party transactions
Transactions with key management personnel
The Group has a related party relationship with its directors and executive officers. The remuneration of the individual directors is disclosed in
the Remuneration report. The remuneration of the directors and other key members of management during the year was as follows:
Short term employment benefits
Contributions to defined contribution pension scheme
2012
£000
1,164
19
1,183
2011
£000
948
15
963
Transactions between the Company and its subsidiary undertakings
Transactions between Group companies are not disclosed as they have been eliminated on consolidation.
Other transactions
The Group traded during the year with A J McCaffery and Maybank Marketing, a company indirectly associated with A J McCaffery. Transactions
in 2012 and 2011 amounted in aggregate to less than £1,500 in each case.
The Group traded during the year with The Imaginarium Studios Limited, a company in which J D S Booth and N J Taylor are directors and
J D S Booth is a shareholder. Imaginarium purchased telecommunication services from the company in the year amounting to £6,181 net of VAT
(2011 - £2,222), of which £376 (2011 - £351) was owed at the year end and is included in trade creditors.
The Group paid commissions in the year to J A Spens, a shareholder in the Company, amounting to £14,719 net of VAT (2011 - £11,237), of which
£Nil (2011 - £463) was owed at the year end and is included in trade creditors. These commissions relate to revenues earned by the Group
following an introduction to a customer by Mr Spens.
The Group established a revolving credit facility of £1.5m in October 2011 with J D S Booth, the Group’s chairman, however no monies have been
drawn against this. Any amounts drawn would be unsecured, carry an interest rate of 6.5 per cent and be repayable by 30 June 2013.
41
Notes forming part of the financial statements for the year ended 31 December 2012 (continued)
25 Accounting estimates and judgements
In the process of applying the Group’s accounting policies, management has made various estimates, assumptions and judgements, with those
likely to contain the greatest degree of uncertainty being summarised below.
Impairment
The Group assesses at each reporting date whether there is an indication that its intangible assets may be impaired. In undertaking such an
impairment review, estimates are required in determining an asset’s recoverable amount; those used are shown in note 11. These estimates
include the asset’s future cash flows and an appropriate discount to reflect the time value of money. The directors do not consider that in the
normal course of events there is a likelihood that an impairment charge would be required.
Fair value of intangible assets acquired in business combinations
The valuation of intangible and certain other assets and liabilities on their acquisition requires management estimates and judgements similar
to those used in assessing their impairment as described above.
Inventory valuation
Where inventories are valued at net realisable value, parts which are not individually priced to market rates are subject to provisioning. Such
provisioning may prove to be over or understated, however any divergence from the estimates used is unlikely to be significant in aggregate.
Receivables
Receivables are recognised to the extent that they are judged recoverable. The directors believe that the current provision for the impairment of
receivables is adequate based on their historic experience and current knowledge of customers and amounts due.
Business combination and asset purchase consideration
In certain circumstances, there is a contingency to the consideration paid on the acquisition of a company or business, and in such cases the
directors have to use judgement on the likely outcome. The estimated £175,000 recoverable from Redstone as part of the consideration for
certain of its business and assets in 2010 was not fully recovered, and £67,000 was consequently expensed in the 2011 income statement. The
contingent consideration due in relation to the Maintel Mobile acquisition was also estimated, and the pro rated amount of £366,000 expensed in
the income statement in 2011.
Contingent consideration
Contingent consideration payable in respect of business combinations or business and asset purchases will generally be dependent on
the trading performance of the entity or business acquired in a defined future period. The directors are therefore required to exercise their
judgement in estimating the outcome of that trading and consequently the consideration likely to be payable.
42
Maintel Holdings Plc Company balance sheet
at 31 December 2012 – prepared under UK GAAP
Annual report and
financial statements 2012
Note
2012
£000
Fixed assets
Investment in subsidiaries
Current assets
Debtors
Cash at bank and in hand
Creditors: amounts falling due within one year
Net current liabilities
Total assets less current liabilities
Capital and reserves
Called up share capital
Share premium
Capital redemption reserve
Profit and loss account
Shareholders’ funds
5
6
7
8
9
9
9
193
12
205
2,398
2012
£000
9,331
(2,193)
7,138
107
1,028
31
5,972
7,138
2011
£000
190
44
234
1,642
2011
£000
6,497
(1,408)
5,089
107
1,013
31
3,938
5,089
The financial statements were approved and authorised for issue by the Board on 8 March 2013 and were signed on its behalf by:
W D Todd
Director
The notes on pages 44 to 47 form part of these financial statements.
43
Notes forming part of the Company financial statements
at 31 December 2012
1 Accounting policies
The principal accounting policies are summarised below; they have been applied consistently throughout the year and the preceding year.
(a) Basis of preparation
The financial statements of the Company are presented as required by the Companies Act 2006. As permitted by that Act, the financial
statements have been prepared in accordance with applicable accounting standards in the United Kingdom and on the historical cost basis.
(b) Investments
Investments in subsidiary undertakings are stated at cost unless, in the opinion of the directors, there has been impairment to their value, in
which case they are written down to their recoverable amount.
The investor recognises income from the investment only to the extent that the investor receives distributions from accumulated profits of the
investee arising after the date of acquisition. Distributions received in excess of such profits are regarded as a recovery of investment and are
recognised as a reduction of the cost of investment.
(c) Taxation
Current tax is the expected tax payable on the taxable income for the year, together with any adjustments to tax payable in respect of previous
years.
(d) Dividends
Dividends unpaid at the balance sheet date are only recognised as a liability at that date to the extent that they are appropriately authorised and
are no longer at the discretion of the Company. Proposed but unpaid dividends that do not meet these criteria are disclosed in the notes to the
accounts.
(e) Contingent consideration
Where payment of contingent consideration in respect of a business combination or acquisition of business and assets is dependent on the
continued employment by the Company of the seller(s), the estimated contingent consideration is pro rated in accordance with the period over
which it is calculated.
2 Employees
The directors’ remuneration is shown in note 5 of the consolidated financial statements.
3 Profit for the financial period
The Company has taken advantage of the exemption under S408 of the Companies Act 2006 and has not presented its own profit and loss
account in these financial statements. The profit for the year of the Company, after tax and before dividends paid, was £3,346,000 (2011 –
£2,282,000).
4 Dividends paid on ordinary shares
Final 2010, paid 28 April 2011 – 4.6p per share
Interim 2011, paid 7 October 2011 – 4.6p per share
Final 2011, paid 26 April 2012 – 6.0p per share
Interim 2012, paid 5 October 2012 – 6.3p per share
2012
£000
-
-
640
672
1,312
2011
£000
482
483
-
-
965
The directors propose the payment of a final dividend for 2012 of 7.3p (2011 – 6.0p) per ordinary share, payable on 25 April 2013 to shareholders
on the register at 22 March 2013.
44
5 Investment in subsidiaries
Cost
At 31 December 2011
Contingent consideration paid and accrued in the period
At 31 December 2012
Provision for impairment
At 31 December 2011 and 31 December 2012
Net book value
At 31 December 2012
At 31 December 2011
Annual report and
financial statements 2012
Shares in subsidiary undertakings
£000
6,577
2,834
9,411
80
9,331
6,497
On 21 October 2011 the Company acquired the entire share capital of Totility Limited (since renamed Maintel Mobile Limited) at the following
valuations:
Purchase consideration
Cash – initial consideration
Cash – in respect of net assets acquired
Ordinary shares (177,778 shares at 1p nominal value and 216.5p share premium per share)
Total initial consideration
Accrued contingent consideration at 31 December 2011
Investment at 31 December 2011
Contingent consideration paid and accrued in 2012
Investment at 31 December 2012
£000
2,435
986
387
3,808
366
4,174
2,834
7,008
Contingent consideration was payable to the sellers of Maintel Mobile dependent on the adjusted gross profit of the company in the 12 months
following its acquisition, subject to a maximum payment of £4.0m. Agreement was reached in July 2012 to accelerate the calculation of this
payment in the sum of £3.1m, of which £2.2m was paid on 31 October 2012 and £0.9m on 3 January 2013. Separately, a further payment of
£0.1m was made on 10 July 2012 to the vendors under the terms of the sale and purchase agreement. Based on earlier estimates of the
contingent consideration amount, a pro rata £366,000 of the contingent consideration was included in the cost of investment in 2011, with the
remainder – £3.2m less £366,000, being £2.834m – added to the cost of investment in 2012.
The following were the principal subsidiary undertakings at the end of the year:
Maintel Europe Limited
Maintel Voice and Data Limited
Maintel Mobile Limited (previously Totility Limited)
Each is wholly owned and incorporated in England and Wales.
45
Notes forming part of the Company financial statements at 31 December 2012 (continued)
6 Debtors
Amounts owed by subsidiary undertakings
Other debtors
Prepayments and accrued income
Corporation tax recoverable
All amounts shown under debtors fall due for payment within one year.
7 Creditors
Amounts due to subsidiary undertakings
Trade creditors
Accruals and deferred income
8 Share capital
Authorised
17,571,840 ordinary shares of 1p each
Allotted, called up and fully paid
10,674,578 (2011 - 10,664,578) ordinary shares of 1p each
2012
£000
170
2
2
19
193
2012
£000
1,488
2
908
2,398
2012
£000
176
107
2011
£000
176
11
1
2
190
2011
£000
290
5
1,347
1,642
2011
£000
176
107
10,000 shares were issued during the year, under the 2009 Share Option Plan.
The Remuneration Committee’s report on page 14 of the consolidated accounts of Maintel Holdings Plc describes the options granted over the
Company’s ordinary shares.
46
9 Reconciliation of movement in shareholders’ funds
At 1 January 2011
Profit for year
Dividends paid
Issue of new ordinary shares
At 31 December 2011
Profit for year
Dividends paid
Issue of new ordinary shares
Share
capital
£000
105
-
-
2
107
-
-
-
Share
premium
£000
Capital
redemption
reserve
£000
Retained
earnings
£000
628
-
-
385
1,013
-
-
15
31
-
-
-
31
-
-
-
31
2,621
2,282
(965)
-
3,938
3,346
(1,312)
-
5,972
At 31 December 2012
107
1,028
Annual report and
financial statements 2012
Total
£000
3,385
2,282
(965)
387
5,089
3,346
(1,312)
15
7,138
It is proposed to pay a final dividend for 2012, of 7.3p per share, on 25 April 2013; this dividend is not provided for in these financial statements.
10 Related party transactions
The Group established a revolving credit facility of £1.5m in October 2011 with J D S Booth, the Group’s chairman, however no monies have been
drawn against this. Any amounts drawn would be unsecured, carry an interest rate of 6.5 per cent and be repayable by 30 June 2013.
Transactions with other Group companies have not been disclosed as permitted by FRS8, as the Group companies are wholly owned.
47
Notice of annual general meeting
(not forming part of the statutory financial statements)
This power shall expire at the conclusion of the next annual general
meeting of the Company or 15 months after the passing of this
resolution (if earlier) unless renewed or extended prior to such time
except that the Company may before such expiry make an offer or
agreement which would or might require the relevant securities to be
allotted after such expiry and the directors may allot equity securities
in pursuance of such offer or agreement as if the power conferred
hereby had not expired.
7. That the Company is, pursuant to Section 701 of the Act, hereby
generally and unconditionally authorised to make market purchases
(within the meaning of Section 693) of up to a maximum of 1,600,119
ordinary shares of 1p each in its capital (representing 14.99% of the
Company’s current issued ordinary share capital), provided that:
(a) the minimum price, exclusive of any expenses, which may be paid
for an ordinary share is 1p;
(b) the maximum price, exclusive of any expenses, which may be
paid for each ordinary share is not more than 5% above the average
published market value for an ordinary share as derived from the
London Stock Exchange Alternative Investment Market for the five
business days immediately preceding the day on which such share is
contracted to be purchased; and
(c) the authority shall expire at the conclusion of the next annual
general meeting of the Company or 15 months after the passing of this
resolution (if earlier), except in relation to the purchase of any ordinary
shares the contract for which was concluded before the date of expiry
of the authority and which would or might be completed wholly or
partly after such date.
By order of the Board
W D Todd
Company Secretary
22 March 2013
Registered office
61 Webber St
London SE1 0RF
Notice is hereby given that the annual general meeting of Maintel
Holdings Plc (“the Company”) will be held at its offices at 61 Webber
Street, London SE1 0RF, on 22 April 2013, at 2.30 pm, for the following
purposes:
Ordinary business
To consider and, if thought fit, to pass the following resolutions which
will be proposed as ordinary resolutions:
1. To receive and adopt the financial statements of the Company for
the year ended 31 December 2012, together with the report of the
directors and the independent auditors’ report thereon.
2. To approve the report of the Remuneration Committee for the year
ended 31 December 2012.
3. To re-elect Mr W D Todd who is retiring as a director in accordance
with Article 92.1 of the company’s Articles of Association and who,
being eligible, offers himself for re-election.
4. To re-appoint BDO LLP as auditors of the Company to hold office
from the conclusion of the meeting to the conclusion of the next
meeting at which accounts are laid before the Company, and to
authorise the directors to agree their remuneration.
Special business
To consider and, if thought fit, to pass the following resolutions, of
which resolution 5 will be proposed as an ordinary resolution and
resolutions 6 and 7 as special resolutions:
5. That the directors be and are hereby generally and unconditionally
authorised pursuant to Section 551 of the Companies Act 2006 (“the
Act”) to exercise all powers of the Company to allot and to make offers
or agreements to allot relevant securities up to a maximum aggregate
nominal amount of £35,581, provided that this authority shall expire
at the conclusion of the next annual general meeting of the Company
or 15 months after the passing of this resolution (if earlier) unless
renewed or extended prior to such time, except that the Company may
before such expiry make an offer or agreement which would or might
require the relevant securities to be allotted after such expiry and the
directors may allot relevant securities in pursuance of such offer or
agreement as if the authority conferred hereby had not expired. This
authority is in substitution for all subsisting authorities to the extent
unused.
6. That, subject to the passing of the previous resolution, the directors
be and are hereby empowered pursuant to Section 570 of the Act to
allot equity securities as defined in Section 560 of the Act for cash as
if Section 561 of the Act did not apply to any such allotment, provided
that this power shall be limited:
(a) to the allotment of equity securities in connection with a rights
issue or other pre-emptive issue in favour of shareholders; and
(b) to the allotment (otherwise than pursuant to sub-paragraph
(a) above) of equity securities up to an aggregate nominal value of
£10,674.
48
Annual report and
financial statements 2012
Notes
1. A member of the Company entitled to attend and vote at the
meeting may appoint one or more proxies to attend, speak
and vote at the meeting instead of him/her. A proxy need not
be a member of the Company. A member of the Company may
appoint more than one proxy provided each proxy is appointed to
exercise the rights attached to different shares. A member may
not appoint more than one proxy to exercise the rights attached
to any one share. Appointment of a proxy will not preclude a
member from attending and voting at the meeting. A form of
proxy is enclosed which you are invited to complete and return. To
be effective, it must be completed and be received at the offices
of the Company’s Registrar not later than 6pm on 19 April 2013.
Completion and return of the form of proxy will not preclude
shareholders from attending and voting in person at the meeting.
2.
The Company, pursuant to Regulation 41 of the Uncertificated
Securities Regulations 2001, specifies that only those
shareholders registered in the register of members of the
Company as at 6.00 pm on 19 April 2013, shall be entitled to
attend or vote at the aforesaid general meeting in respect of the
number of shares registered in their name at that time (or in the
event that the meeting is adjourned, 48 hours before the time
of the adjourned meeting). Changes to entries on the relevant
register of securities after 6.00 pm on 19 April 2013 shall be
disregarded in determining the rights of any person to attend and
vote at the meeting.
3.
In order to facilitate voting by corporate representatives at the
meeting, arrangements will be put in place at the meeting so
that (i) if a corporate member has appointed the chairman of
the meeting as its corporate representative with instructions
to vote on a poll in accordance with the directions of all of
the other corporate representatives for that member at the
meeting, then on a poll those corporate representatives will
give voting directions to the chairman and the chairman will vote
(or withhold a vote) as corporate representative in accordance
with those directions; and (ii) if more than one corporate
representative for the same corporate member attends the
meeting but the corporate member has not appointed the
chairman of the meeting as its corporate representative, a
designated corporate representative will be nominated, from
those corporate representatives who attend, who will vote on
a poll and the other corporate representatives will give voting
directions to that designated corporate representative. Corporate
members are referred to the guidance issued by the Institute
of Chartered Secretaries and Administrators on proxies and
corporate representatives – www.icsa.org.uk – for further
details of this procedure. The guidance includes a sample form
of representation letter if the chairman is being appointed as
described in (i) above.
49
Maintel, 61 Webber Street, London SE1 0RF www.maintel.co.uk