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2020
Annual Report
& Accounts
Maintel Holdings Plc
Contents
Overview 2020
Strategic report
Chairman’s statement
Maintel overview
Business review
Corporate governance
Board of directors
Report on corporate governance
Report of the remuneration committee
Report of the directors
Statement of directors’ responsibilities
Page
1
2
4
15
30
32
42
48
52
Financial statements
54
Independent auditor’s report
60
Consolidated statement of comprehensive income
Consolidated statement of financial position
61
62
Consolidated statement of changes in equity
63
Consolidated statement of cash flows
65
Notes forming part of the consolidated financial statements
91
Maintel Holdings Plc - Company balance sheet
Maintel Holdings Plc - Company statement of changes in equity 92
93
Notes forming part of the Company financial statements
98
Directors, Company details and advisers
1
Overview 2020
Ioan MacRae, CEO
“In common with companies across the globe, 2020
presented a challenge like no other to our customers, our
staff and our company. So many organisations in both the
public and private sectors depended on Maintel to keep
their mission critical operations functioning. In the public
sector that includes front line hospital trusts, police control
rooms, fire services, care home operators, local authorities,
government agencies and social housing providers – and
in the private sector financial services organisations, high
street household name retailers and utility organisations,
providing critical national infrastructure services.
I am immensely proud of the role that Maintel has played
in supporting our customers during the pandemic, and
of the fantastic response from our colleagues who made
the transition to remote working while continuing to work
incredibly hard to ensure that our customers could do
the same. Worthy of special recognition is our field-based
engineering team who continued to provide onsite
technical support, in particular to NHS Trusts, throughout
the pandemic.
As a result of the pandemic we have understandably
seen certain customers delay new orders to preserve
cash flows whilst uncertainty around the macroeconomic
outlook remained. Furthermore, certain project work was
delayed due to difficulties with site access during the
lockdowns. Inevitably this had a significant impact on
both revenue and EBITDA in the period. Revenue was
also affected by the full year impact of the loss of several
legacy contracts in 2019 within our channel partner
network, as previously announced.
Notwithstanding these challenges, the business achieved
a huge amount during the period, with the meeting of
KPIs such as reaching over 100,000 cloud seats, showing
a positive momentum in line with our new strategy. We
continued to invest in the Group’s transformation to a
cloud first business, launching four significant new product
sets and undertaking a significant restructure from the
Board down.
As a result of the restructure, a process which commenced
prior to the pandemic but which we accelerated as
a consequence of it, we have achieved a significant,
underlying annualised reduction in OPEX of £3m and
a business which is leaner, stronger, more efficient and
better positioned to take advantage of the opportunities
available and changing customer requirements.
This year has started promisingly and in line with
management’s expectations; we enter the second half
of the year with a healthy orderbook. We have continued
to simplify the business and focus on our cloud offering,
announcing the sale of the Managed Print Service
business in March, the proceeds of which have been
used to reduce net debt.
I firmly believe that the business is in a strong position
to deliver organic growth on a like for like basis in both
revenue and EBITDA in FY 2021.”
13%
20%
31%
3pp
£106.4m £9.5m
Group revenue
(2019: £122.9m)
Group adjusted
EBITDA1
(2019: £11.8m)
102,000
Contracted cloud
seats
(2019: 78,000)
73%
Recurring revenue
(2019:70%)
Notes
1 Adjusted EBITDA is EBITDA of £7.3m (2019: £11.7m), adjusted for exceptional costs and share based payments (note 12).
2
Maintel Holdings Plc Annual Report & Accounts 2020
Chairman’s statement
John Booth, Chairman
In a challenging year, Maintel has continued to invest in future
growth and accelerate its transition to a cloud and managed
service provider, focused on supporting its customers, many of
them on the front line of response to the COVID-19 pandemic.
The combined impact of the pandemic and the
lower managed services support base entering the
year resulted in a 13% reduction in Group revenue to
£106.4m and a consequent 20% reduction in adjusted
EBITDA. The lower EBITDA margin was driven by the
significant reduction in higher margin technology
revenue in the period as project work was delayed as
customers sought to preserve cash. Adjusted earnings
per share decreased 39% to 31.9p with a basic loss
per share of 12.1p. The period-end net debt position
showed a significant reduction to £22.3m.
Our managed support base saw a reduction in
revenue of 17% to £35.6m, predominantly due to
contract losses already announced in 2019 but only
fully realised in 2020. There was in addition some price
erosion and substitution as customers migrated to
cloud. Our technology division revenues were the
hardest hit by the pandemic with a reduction of 23%
to £29m.
The number of subscribers on our ICON and public
cloud platforms increased by 31% to a record 102,000
(2019: 78,000) with revenue from cloud and software
customers now totalling £27.2m, accounting for 26%
of Group revenue. The revenue benefit from the
additional contracted seats will be realised in 2021
and beyond as these roll out.
Our new CEO, who joined us in October 2019,
has delivered a significant restructuring of the
Group including the senior executive team. This
has reduced headcount by 6%, removing £3m
of annualised costs. The new structure is more
efficient, aligned to our key verticals and well
positioned to capitalise on the investments which
we have continued to make in our product portfolio
and intellectual property.
We were grateful for the support of the Government
through the difficult stages of the pandemic, using
the furlough scheme to retain key staff for whom
on- premise project work was simply not available for
periods of the year. We also deferred the payment
of VAT in Q2 2020 (due to be paid in full by February
2022) and took advantage of the CLBILS scheme as
part of the refinancing agreement we concluded in
May 2020.
I am pleased to be able to report that our rejuvenated
sales team reached its sales target in the fourth
quarter for the first time in several quarters, and that
order intake post period end in 2021 has been strong.
Given the continuing economic uncertainty, the Board
is not recommending a dividend at this stage and will
review this decision later in the year.
Following the announcement that Annette Nabavi
has decided to retire as a non-executive director
following this year’s Annual General Meeting, I would
like to thank Annette for her significant contribution to
Maintel over the past 7 years. We wish her all the very
best in her future ventures.
Maintel is proud of its engagement in the front line
of pandemic response, and the Board is immensely
grateful to our staff who have worked so tirelessly
in difficult and unusual circumstances this year. We
remain confident in the new leadership team’s plan to
re-engineer and build the Group for a cloud-first world
and in our return to organic growth.
John Booth
Chairman
1 June 2021
Strategic Report
3
4
Maintel overview
Key Performance Indicators
Revenue
£106.4m
(2019: £122.9m)
Revenue
Revenue
2020
2020
2019
2019
2018
2018
-13%
Recurring Revenue %
73%
(2019: 70%)
Recurring Revenue %
Recurring Revenue %
£106.4m
£106.4m
£122.9m
£122.9m
£136.5m
£136.5m
2020
2020
2019
2019
2018
2018
+3pp
73%
73%
70%
70%
69%
69%
The total of sales from all customers and partners
in all markets. The prime indicator of the size of our
Company.
The percentage of overall revenue that is
contracted and recurring. A good indicator of
visibility and predictability of earnings.
Revenue
Revenue
Recurring Revenue %
Recurring Revenue %
Gross Margin %
Gross Margin %
2020
2020
£106.4m
£106.4m
Adjusted EBITDA
Adjusted EBITDA
2020
2020
2020
2019
2020
2019
2019
2018
2019
2018
29.0%
29.0%
£122.9m
£122.9m
28.7%
28.7%
£136.5m
£136.5m
2020
2019
2020
2019
2019
2018
2019
2018
73%
73%
£9.5m
£9.5m
70%
70%
£11.8m
£11.8m
69%
69%
Gross Margin %
2018
2018
28.7%
28.7%
29%
(2019: 28.7%)
Gross Margin %
Gross Margin %
+0.03pp
Adjusted EBITDA
2018
2018
£9.5m
(2019: £11.8m)
Adjusted EBITDA
Adjusted EBITDA
£12.7m
£12.7m
-20%
2020
2020
Net Debt
Net Debt
29.0%
29.0%
2020
Cloud Seats
2020
Cloud Seats
£9.5m
£9.5m
2019
2020
2019
2020
2018
2019
2018
2019
22.3
22.3
28.7%
28.7%
25.7
28.7%
25.7
28.7%
2019
2020
2019
2020
2018
2019
2018
2019
£11.8m
£11.8m
102,000
102,000
78,000
78,000
£12.7m
£12.7m
2018
2018
Gross Margin %
25.5
25.5
2018
2018
61,900
Adjusted EBITDA is EBITDA adjusted for exceptional
costs and share based payments. A great indicator
of trading performance.
61,900
Net Debt
Net Debt
Cloud Seats
Cloud Seats
Customer Satisfaction Score
Customer Satisfaction Score
2020
2020
22.3
22.3
2020
2019
2020
2019
2019
2018
2019
2018
2018
2018
n/a
n/a
25.7
25.7
25.5
25.5
4.27
4.27
3.91
3.91
2020
2020
2019
2019
2018
2018
102,000
102,000
78,000
78,000
61,900
61,900
Customer Satisfaction Score
Customer Satisfaction Score
2020
2020
2019
2019
2018
2018
n/a
n/a
4.27
4.27
3.91
3.91
Maintel Holdings Plc Annual Report & Accounts 2020Strategic report Revenue
Revenue
2020
2020
2019
2019
2018
2018
Recurring Revenue %
Recurring Revenue %
£106.4m
£106.4m
£122.9m
£122.9m
£136.5m
£136.5m
2020
2020
2019
2019
2018
2018
73%
73%
5
5
70%
70%
69%
69%
Revenue
Recurring Revenue %
Gross Margin %
Gross Margin %
2020
2020
2019
2020
2019
2018
2019
2018
2018
Net Debt
£22.3m
Gross Margin %
(2019: £25.7m)
£106.4m
29.0%
29.0%
£122.9m
28.7%
28.7%
28.7%
28.7%
£136.5m
-£3.4m
Adjusted EBITDA
Adjusted EBITDA
2020
2020
2019
2020
2019
2018
2019
2018
2018
Cloud Seats
102,000
Adjusted EBITDA
(2019: 78,000)
73%
£9.5m
£9.5m
70%
£11.8m
£11.8m
69%
£12.7m
£12.7m
+31%
2020
Net Debt
Net Debt
29.0%
2020
Cloud Seats
Cloud Seats
£9.5m
2020
2019
2020
2019
2018
2019
2018
2018
22.3
22.3
28.7%
25.7
25.7
28.7%
25.5
25.5
2020
2019
2020
2019
2018
2019
2018
2018
£11.8m
102,000
102,000
78,000
78,000
£12.7m
61,900
61,900
The net position of cash debt at year-end
(December 31st 2020). A measure of control over
the Group’s liquidity.
Net Debt
The total number of contracted cloud seats across
all the Group’s cloud offers. A vital measure of the
Group’s transformation to a next-generation cloud
business.
Cloud Seats
Customer Satisfaction Score
Customer Satisfaction Score
2020
22.3
2020
2019
2020
25.7
4.27
4.27
2018
2019
2019
Customer
Satisfaction Score
2018
2018
25.5
n/a
n/a
4.27
(2019: 3.91)
Customer Satisfaction Score
2020
2019
2018
n/a
3.91
3.91
+9%
4.27
3.91
2020
2019
102,000
78,000
2018
Net Promoter
Score
61,900
41.6
(New Metric- no comparator)
n/a
This is a new metric for Maintel –
no historic data is available.
A key measure of customer satisfaction taken as
the average of hundreds of sampled responses
each month.
An internationally recognised metric which provides
a good indication of the quality of customer
experience provided.
Maintel Holdings Plc Annual Report & Accounts 2020 Strategic report 6
Maintel overview continued
Our Proposition
Maintel is a cloud and managed services company
focussed on communications. Our people become
trusted partners for our clients, creating value by
helping them improve their business by:
• making their people more effective and efficient
with digital workplace technology
• helping them to acquire, develop and retain their
customers with customer experience technology
• securely connecting their employees to
their applications and their data with secure
connectivity
Although Maintel’s historic roots are as a provider
of on-premise technology and services, Maintel’s
flagship offer is its ICON suite of cloud and
managed services and now more than 25% of all
revenues come from customers taking Maintel’s
cloud & software services. Maintel’s cloud
communications services have seen significant
(31%) growth in seat count and 44% growth in
subscription revenue in the year and are a key
strategic focus for FY21 and beyond.
Digital
Workplace
Customer
Experience
Secure
Connectivity
Maintel Holdings Plc Annual Report & Accounts 2020Strategic reportKEEP THESE? 7
ICON
The ICON platform itself is a highly secure, highly available, highly scalable multi-cloud and network platform,
hosted across four top-tier data centres and complemented by Amazon Web Services (AWS) in the UK. From the
platform, we deliver these key services:
ICON Communicate
ICON Contact
Enterprise class Unified Communications as a Managed Service
Contact Centre as a Service
Highly secure, highly available, highly customisable.
With ICON Communicate we can deliver the flexibility
of on-premise technology with the benefits of a cloud
delivery model, backed up by Maintel’s renowned
managed service capability.
Our cloud managed contact centre service
offering deep application integration, self-service,
comprehensive compliance and flexible technology
and commercial options.
ICON Now
ICON Secure
True Cloud Communications
Managed Security as a Service
Our Unified Communications as a Service offer for the
mid-market. Highly capable, simple to use, contract
and deploy.
A suite of security services delivered from the cloud
as a service and backed up with expertise from our
Security Operations Centre.
ICON Connect
Cloud-optimised connectivity
Maintel’s next-generation managed network service
enabling users to access their applications and their
data in the office, in the branch, on the move or in
their homes.
Maintel Holdings Plc Annual Report & Accounts 2020 Strategic report 8 Maintel Holdings Plc Annual Report & Accounts 2020
Strategic report
Maintel overview continued
Maintel’s Vendor Alliance Partners
Maintel is proud to work with world-class technology companies to deliver services to customers – either via the
ICON cloud platform or on-premise. While there are a host of vendors required to deliver complete solutions to
customers, there are six key strategic lead partners.
PARTNER
STATUS
FOCUS AREA
KEY POINTS
Avaya Edge Diamond
Partner & DevConnect
CX & UC in financial
services & utilities, cloud
delivered via Maintel’s
ICON platform
• Maintel delivered UK’s first cloud-
deployed Aura deployment
• Top 3 UK partner, most accredited
partner in Europe
Mitel Platinum Partner
UC & UCaaS in public
sector markets and retail
• Awarded Mitel’s International
Cloud Partner of the Year
UCaaS in mid-market
Cisco Gold Partner
& Master Cloud &
Managed Services
Partner
Maintel’s lead partner
for wired and wireless
networking, security, WAN
and SD-WAN
• Focus partner for SD-WAN
• Focus partner for Security
• Specialisations in Collaboration,
Data Centre, Enterprise
Networking and Security
Black Diamond Partner
LAN and Wireless LAN
in some public sector
markets
• Fastest growing UK partner
• Focus partner for public sector
• UK&I Partner of the Year
Partner
Partner
Enterprise Contact Centre
as a Service (CCaaS)
• Former UK&I Partner of the year
• Former Gold Partner Exec Council
Member
Public Cloud Unified
Communications as a
Service (UCaaS) across
all sectors
• Strong relationships both direct
and in partnership with Avaya
• Focus partner for public sector
As cloud-adoption has accelerated, particularly
through the COVID-19 pandemic, there has been a
greater acceptance of public-cloud services amongst
our key markets, and Maintel has strengthened
its public cloud communications offers through
relationships with leaders in this space. Genesys and
RingCentral are global leaders in Contact Centre as
a Service (CCaaS) and Unified Communications as
a Service (UCaaS) respectively – with both services
available across all customer segments.
This new relationship with RingCentral, combined
with the increased focus on the existing relationship
with Genesys, means that Maintel is able to deliver
on its core offer of delivering transformational cloud
communication services that meet the needs of
all customers – whether that is the flexibility and
scalability afforded by the public cloud offers, or
the high-availability, dependability and compliance
advantages of the ICON Virtual Private Cloud services.
Maintel Holdings Plc Annual Report & Accounts 2020
Strategic report
9
• Experience enhancing products – ICON Portal
is a front-end interface for all support and in-life
management interactions for customers, providing a
single interface with a single logon where customers
can access monitoring, status, ticketing, billing,
order placement and management and other
typical interactions. The first version of this portal was
launched in the first quarter of 2020 since the period
end and we have an aggressive roadmap to add
capability over FY21
• Enhancing and supporting delivery – Maintel has
produced a set of tools to automate the quoting,
provisioning and support of its ICON Cloud services
to support the significant scale we have planned
for the cloud offer, to accelerate the time taken to
quote and provision services and to simplify both
implementation and in-life support.
Maintel’s Intellectual Property
Maintel also has considerable intellectual property,
typically deployed alongside and to enhance
the offers from the key technology partners. This
Intellectual Property (IP) is in three categories: software
products and services, tools to extend the customer
experience, and tools to support and enhance
Maintel’s service delivery:
• Maintel Software Products – Callmedia CX Now is
Maintel’s multi-channel Contact Centre as a Service
offer, delivered as a public-cloud service – and
developed in-house by Maintel Software. Launched
in 2020 Q4, Callmedia CX Now is built upon more
than a decade of experience in delivering hosted
multi-channel contact centre services – but is
developed from the ground up to make use of the
latest technology: using a per-customer routing
engine and database to ensure flexibility and privacy,
behind a multi-tenanted voice platform hosted in
AWS to deliver an agent experience that is purely
browser-based, flexible and scalable. The established
Callmedia multi-channel contact centre product is
still available both on-premise and as a Virtual Private
Cloud offer via ICON Contact. During the period,
Maintel Software also launched ICON Contact
Chatbot, leveraging AI technology to provide a
high- quality automated channel to customers for
either full problem resolution or to triage interactions
before handing them off to a live agent
10
Maintel overview continued
Our market & our customers
Maintel provides its cloud and managed communication services primarily to the UK public and private sectors.
Our core focus is on organisations with between 250 and 5,000 employees in the private, public and not-for-profit sectors
with headquarters in the UK. Although we serve the whole market, we are particularly focussed on six key verticals:
Public & not-for-profit sector
Health
Local Government
Social Housing
We are trusted by more than 40
health trusts to provide them with
the mission critical communications
services they use to ensure the
effective operations of hospitals and
community care services.
Examples
UCLH, Royal Brompton, South
Lanarkshire, Betsi Cadwaladr
We enable the staff of 35 unitary
and other local authorities to better
serve a combined total of 15 million
citizens.
We enable the smooth running
of many UK housing associations,
helping them to support the
residents of more than 300,000
homes.
Examples
Durham County Council, South
Lanarkshire Council, Powys County
Council
Examples
Optivo, Sanctuary Housing
We also have many customers in “Blue Light” emergency services (including control room systems), education,
government agencies, large charities and some national government departments.
Private sector
Retail
Financial Services
Utilities & Services
We provide services to enable
the smooth and secure running
of almost 10,000 retail sites and
numerous online brands, enabling
them to minimise their costs,
maximise their information security
and serve their customers better.
Examples
JD Sports, Wiggle, Matalan
We help banks, insurers and
service providers to serve their
customers securely across any
channel, providing the right blend
of automation, self-service and
personalised experience.
We help utility providers across
energy, telecoms & water to
provide their products and services
to their customers.
Examples
NFU Mutual, ING Bank, Bank of
Montreal, Admiral Insurance
Examples
SSE, Severn Trent Water, Biffa
We have private sector customers in many other industries, including transport & logistics, business process outsourcing,
entertainment and leisure and professional services.
Maintel Holdings Plc Annual Report & Accounts 2020Strategic report 11
We help a range of channel partners, enabling
them to broaden their service portfolios, providing
managed communications services to complement
their existing offerings. Typically, our channel partners
are systems integrators or telecommunications
providers seeking to provide a complete outsourced
IT function to their multi-national or FTSE250 clients.
Maintel Partner Services also provides European
implementation, support and managed services for
their partners’ typically US-based multi-national clients.
This channel continues to transform towards cloud
and software services, and in FY20 one of Maintel’s
largest cloud deals came via a channel partner, for
an 8,000 seat private healthcare deployment.
Although Maintel’s principal activities are within the
UK, the Group has a subsidiary based in the Republic
of Ireland (Maintel International Limited) which
serves a number of customers both in the Republic of
Ireland and the EU.
Our people & culture
It is our people who deliver our cloud and managed
services and who add value to our clients, helping
them to transform their businesses for the better.
We’re proud of our people - our most expensive and
our most valuable asset - and know that in today’s
information economy we have to win the battle to
both attract and retain our talent.
Our people strategy
Our people strategy is focussed on attracting,
retaining and developing the talent we need to be
successful, and enabling our people to be effective in
work and to develop their careers with Maintel.
The people team supports the business in all aspects
of talent management & recruitment and has been
bolstered in the last year with significant investment
in Learning & Development, with a strong focus on
developing Maintel’s leadership team to help us to
enable our people to reach their full potential.
Our culture
Our culture is an important aspect of who we are –
how we enable our people to reach their full potential,
how we service our customers, and how we ensure
we stay ahead of the curve in a rapidly developing
technology sector.
Our values
Our values inform every aspect of how we work with
each other and with our customers, how we act
corporately and individually, and our tactical and
strategic decision making. At Maintel, we are aligned
to this established set of values:
We play it straight
Honesty, transparency and integrity in our
dealings with each other, our partners and
our customers.
We enjoy what we do and work as a team
Enjoying being at work, being serious
without taking ourselves too seriously.
Valuing each and every individual, while
putting what’s right for the team first.
We are pioneering
Being courageous and resourceful,
developing our business by improving
those of our customers, anticipating
change and challenging the status quo.
We are empowered, and accept
accountability
Doing what’s right and taking
responsibility. Being accountable for our
targets, actions and commitments.
We are agile and flexible
Flexible and agile people, processes and
services – able to adapt quickly.
We constantly learn and grow
Always learning – never standing still.
Maintel Holdings Plc Annual Report & Accounts 2020 Strategic report 12
Maintel overview continued
Intelligence (AI) and Machine Learning technologies
to improve outcomes for customers – either by
ensuring the best possible match of available agents
to queuing customers or by supporting a significantly
improved experience using self-service channels. AI is
driving a lot of product evaluation and pilot projects.
Our secure connectivity offer is also positioned to
capture three significant business trends: our ICON
Connect service is optimised to support customers as
they transition not just their communication services
but all their business applications to the cloud. ICON
Connect SD-WAN is positioned to take advantage
of high growth rates, with CAGRs of 34.5%5 and 60%6
cited in recent reports. As an early stage technology,
these figures represent growth from a low base, and
much of it will be substitutional from traditional WAN
technologies. Finally, ICON Secure’s cyber security
service serves a market currently seeing 10%7 CAGR
and in particular a Managed Security Services
CAGR of 14%8 to 2022.
Mergers & acquisitions
Maintel has made a number of significant
acquisitions in recent years, bringing scale,
capability, customers and talent into our
organisation. Where appropriate we will continue
to use acquisitions to bring us new capabilities and
increase the base of customers for our managed
services. But our focus for FY21 is a return to organic
growth.
Our future
These are exciting and fast-moving times for
the communications sector, with a rapid pace
of innovation in technology development and
adoption.
We have an enviable client base of both public and
private sector clients, which is driving much of our
growth in cloud and other next-generation services.
Approximately 55% of our cloud growth is coming
from that installed base, with the balance from new
customer acquisition, and we still have more than
75% of our managed services base to take on the
cloud journey. With analyst reports for the UCaaS
market typically estimating between 10.5%1 and
11.6%2 compound annual growth rate (CAGR) to
2025, there is plenty of market to go after for our
flagship ICON services. During FY20 we added global
UCaaS leader RingCentral to our portfolio, further
widening the addressable market for our Digital
Workplace pillar.
Uptake in contact centre technology, driven by
organisations wishing to differentiate themselves by
offering an improved customer experience and by
consumers wishing to interact with their suppliers and
service providers via an increasing number of digital
channels, is also experiencing significant growth,
with CAGRs of 21.1%3 and 29%4 cited in two recent
analyst reports. As with unified communications,
contact centre operators are steadily migrating their
technology to the cloud. Maintel’s ICON Contact
offer is positioned to support customers in that
transition and for 2021 we also have Callmedia CX
Now for the sub 250 seat opportunities to 500 seats,
and Genesys cloud for the larger and more complex
customers. The Customer Experience (CX) market
is being further enriched by the use of Artificial
1 “Unified Communication as a Service (UCaaS) Market Size, Share & Industry Analysis…2019-2026”, Fortune Business Insights, June 2020
2 “Forecast: Unified Communications, Worldwide, 2018-2025, 1Q21”, Gartner, March 2021
3 “Contact Center Software Market Size, Share & Trends Analysis Report…., 2021-2028”, Grand View Research, January 2021
4 “Forecast Analysis: Contact Center, Worldwide”, Gartner, January 2021
5 “Software-Defined Wide Area Network Market by Components, Deployment Type and Region – Global Forecast to 2025”, Markets & Markets, August 2020
6
“Software-Defined Wide Area Network Market Size by Component, Service, By Deployment Model, Industry…Competitive Market Share & Forecast,
2020- 2026”, Global Market Insights – Pretty Wadhwani, Sachin Kasnale, May 2020
7 “Cybersecurity Market by Solution…. And Region – Global Forecast to 2023”, Markets & Markets, September 2020
8 “Global Managed Security Services Market Size, Status & Forecast 2025”, QY Reports, May 2020
Maintel Holdings Plc Annual Report & Accounts 2020Strategic report 13
• Increasing the capacity of our core platforms as we
continue to grow our cloud platform.
• Enhancing the capability of our cloud services,
adding additional features and services to
the existing ICON Services to ensure market
competitiveness.
Investing in Maintel’s future
As a pioneering company, we continually invest
in ensuring our proposition is relevant and that
our people are equipped with the skills they need
to deliver today’s services. Throughout FY20 we
continued to fund our investment in R&D at our
Maintel Technology Centre in Fareham. Our focus
during the year has been:
• The development and launch of our Contact Centre
as a Service (CCaaS) offer, Callmedia CX Now.
This builds on our years of experience in delivering
hosted multi-channel contact centre services with
a modern, public cloud platform to enable our
customers’ agents to manage their customers’
experiences across channels using only an internet
connection and a web browser. During the year
we also released an AI Chatbot service (based
on Google’s CCAI technology) and a number of
enhancements across the ICON Contact service.
• The development and launch, in conjunction with
our partner Cisco, of a suite of services for home
and remote working under the banner of “Secure
Homeworker”. These services enable organisations
to continue to operate securely, productively and
with high availability with staff based in any location.
• Improving our operational effectiveness – the
development of automated quoting and
provisioning tools and providing enhanced
portal access for customers across all our cloud,
network and managed services. We have added
capabilities across our ICON Communicate and
ICON Now services from the portal, as well as
enabling customers to monitor the progress of
in-flight projects and orders.
Maintel Holdings Plc Annual Report & Accounts 2020 Strategic report 14
Glossary
Artificial Intelligence
(AI)
The sub-set of computer science aimed at the development of software capable of
doing things that are normally done by people – in particular, things associated with
people acting intelligently.
Contact Centre as a
Service (CCaaS)
The implementation of a contact centre platform without the need to install
any on-premise equipment or purchase technology up-front. CCaaS is typically
provided on a “per user, per month” basis, but there are other models such as
paying per transaction or perpetual licencing.
Customer Experience
(CX)
The practice of using the experiences of customers as a competitive differentiator.
Maintel’s CX practice is primarily concerned with the design, implementation and
support of technology to facilitate customer interactions via the contact centre or
digital channels.
Machine Learning (ML)
The use of software to analyse very large data sets and use the analysis to answer
questions and make decisions.
Software Defined Wide
Area Network (SD-WAN)
The latest generation of wide area networking technology that enables centralised
and simple configuration, connection irrespective of the underlying circuit or wireless
technology, and a range of business-oriented networking services.
Unified Communications
(UC)
Unified Communications is a suite of tools to allow team members to collaborate,
including instant messaging (IM), presence, screen and document collaboration
and both audio and video conferencing.
Unified Communications
as a Service (UCaaS)
The implementation of unified communications tools without the need for an
organisation to install any hardware or software on their premises or in their data
centres. UCaaS is usually provided on a “pay as you go” basis with minimal up-front
costs and the ability to flex the capacity of the service up and down during the term
of the agreement.
Maintel Holdings Plc Annual Report & Accounts 2020Strategic report Business review
15
Results for the year
Cash performance
Revenues decreased 13% to £106.4m (2019: £122.9m)
and adjusted EBITDA decreased by 20% to £9.5m
(2019: £11.8m). Recurring revenue as a % of total
revenue (being all revenue excluding one-off projects)
increased to 73% (2019: 70%) as a result of the
reduction in technology and installation revenues and
the increase in cloud revenue.
The Group generated net cash flows from operating
activities of £9.6m (2019: £9.7m) resulting in a strong
cash conversion(c) of 123% for the full year (2019: 88%).
Net cash flows from operating activities included a
£2.9m working capital benefit arising from HMRC’s
COVID-19 VAT deferral scheme. Excluding this benefit
underlying cash conversion was 92%(c).
Gross profit for the Group decreased to £30.9m
(2019: £35.2m) with gross margin increasing to 29.0%
(2019: 28.7%).
The Group delivered adjusted profit before tax of
£6.3m (2019: £8.5m). Adjusted earnings per share (EPS)
decreased by 39% to 31.9p (2019: 52.6p) based on a
weighted average number of shares in the period of
14.3m (2019: 14.3m).
On an unadjusted basis, the Group generated a loss
before tax of £2.2m (2019: profit before tax of £1.8m) and
loss per share of 12.1p (2019: earnings per share of 22.4p).
This includes £2.5m of exceptional items (2019: £0.4m)
(refer note 13) and intangibles amortisation of £6.3m
(2019: £6.7m).
Revenue
(Loss) / profit before tax
Add back intangibles amortisation
(c) calculated as operating cash flow (being adjusted EBITDA plus working
capital) to adjusted EBITDA
Review of operations
ICON is Maintel’s suite of cloud services, the main
services being ICON Communicate (enterprise grade
managed unified communications), ICON Now
(Unified Communications as a Service), ICON Secure
(network security) and ICON Connect (managed
WAN). Elements of cloud services revenues are currently
accounted for in both the managed services and
technology division (under both managed services
related and technology revenue lines), and the
network services division (under the data connectivity
services and cloud revenue lines). Cloud services
revenues accounted for 26% of total Group revenues
in the period (2019: 22%). Despite the macroeconomic
conditions, cloud services revenues remained flat at
£27.3m (2019: £27.3m), demonstrating the high quality,
recurring nature of this revenue stream.
2020
£000
2019
£000
(Decrease)/
increase
106,430
122,932
(13)%
Exceptional items mainly relating to the restructuring and reorganisation of the
Group’s operations
Share based remuneration
Adjusted profit before tax
Adjusted EBITDA(a)
Basic (loss)/ earnings per share
Diluted
Adjusted earnings per share(b)
Diluted
(a) Adjusted EBITDA is EBITDA of £7.3m (2019: £11.7m) less exceptional costs and share based remuneration (note 12)
(b) Adjusted profit after tax divided by weighted average number of shares (note 11)
(2,232)
6,286
2,482
(259)
6,277
9,522
(12.1p)
(12.1p)
31.9p
31.8p
1,764
6,674
385
(274)
8,549
11,840
22.4p
22.2p
52.6p
52.1p
(27)%
(20)%
-
-
(39)%
(39)%
Maintel Holdings Plc Annual Report & Accounts 2020 Strategic report 16
Business review continued
The following table shows the performance of the three operating segments of the Group.
Revenue analysis
Managed services related
Technology(d)
Managed services and technology division
Network services division
Mobile division
Total Maintel Group
(d) Technology includes revenues from hardware, software, professional services and other sales
2020
£000
35,614
28,617
64,231
36,201
5,998
2019
£000
(Decrease)/
increase
42,910
36,943
79,853
37,649
5,430
(17)%
(23)%
(20)%
(4)%
10%
(13)%
106,430
122,932
As part of the Group’s ongoing review of its
operational structure, it was decided to outsource
our logistics and stock replenishment functions to
a leading third-party logistics provider, with a 5
year contract being signed in December 2020. The
commercial agreement included the sale of the
Group’s spare parts and project inventory for £1.3m
generating a profit on sale of £0.3m. Excluding the
stock sale, technology revenues declined by 26%.
Managed services and technology
division
The managed services and technology division
provides the management, maintenance, service
and support of unified communications, contact
centres and local area networking technology on
a contracted basis, on customer premises and in
the cloud. Services are provided both across the UK
and internationally. The division also supplies and
installs project-based technology, professional and
consultancy services to our direct clients and through
our partner relationships.
Division revenue
Division gross profit
Gross margin (%)
Revenue in this division decreased by 20% to £64.2m,
with professional services particularly impacted by the
effect of the two lockdowns on the Group’s ability to
access sites to deliver projects. Gross profit declined
by 16% to £17.6m (2019: £21.0m) with gross margin
increasing to 27% (2019: 26%).
Technology revenues fell by 23% in the period as
an initial Q1 revenue boost, caused by increased
demand for certain technologies as customers
invested in remote working solutions and disaster
recover capabilities, was offset by project delays as
a result of the two nationwide lockdowns.
However, a strong close of orders in Q4 2020, including
significant contracts from Matalan, West Yorkshire Fire
& Rescue Service, Liverpool City Council, Stevenage
Borough Council, North Ayrshire Council, Electricity
North West, SSE and Lycatel, meant we exited the year
with a healthy order book and growing sales pipeline.
2020
£000
64,231
17,620
27%
2019
£000
79,853
21,043
26%
Decrease
(20)%
(16)%
Maintel Holdings Plc Annual Report & Accounts 2020Strategic report 17
Our managed services base declined by 14% in the
period, driven by the contract losses reported in 2019
as a result of channel partners restructuring their
operations, alongside a degree of price erosion from
some customers downsizing their estates and some
customers transitioning from our on-premise solutions to
our cloud-based platforms where traditional “support”
is replaced by a longer term, recurring managed
services element, which is reported in network services.
In addition, our cost-per-copy revenues within our
document solutions business were much reduced as
a result of the lockdowns and associated increase in
home working.
Network services division
The network services division sells a portfolio of
connectivity and communications services, including
managed MPLS networks, SD-WAN services, security
as a service, internet access services, dedicated
access to public cloud services, SIP telephony services,
inbound and outbound telephone calls and hosted
IP telephony solutions. These services complement
the on-premise and cloud solutions offered by the
managed service and technology division and the
mobile division’s services.
Network services revenue decreased by 4%, with gross
margins reducing to 29% from 31% in the prior year,
which was helped by some catch-up billing.
Traditional fixed line revenues (shown above under call
traffic and line rental) decreased by 12% to £12.1m
(2019: £13.7m), which is a reflection of the overall
market decline and some reduction in call volumes
during the lockdown periods, as well as a shift in the
focus of the Group to meet the higher demand for
margin rich cloud and SIP services. There was a net
increase in circuits within our SIP subscription base of
18%.
Data connectivity revenues declined by 11%,
impacted by the tail of previously announced legacy
contract terminations. On an underlying basis,
excluding these legacy contracts, data revenues
declined by 4%. Our SD-WAN proposition, which was
launched in FY19, has been instrumental in securing
both new WAN business and contract extensions within
Call traffic
Line rental
Data connectivity services
Cloud
Other
Total division
Division gross profit
Gross margin (%)
2020
£000
4,507
7,583
2019
£000
5,083
8,589
17,088
19,122
6,476
547
36,201
10,669
29%
4,493
362
37,649
11,715
31%
Increase/
(decrease)
(11)%
(12)%
(11)%
44%
51%
(4)%
(9)%
our existing network base. However there has been
a delay to the rollout of these projects, and therefore
revenue, as a result of the pandemic and customers
looking to defer spend on new projects and upgrades
until they have more certainty over cash flows.
related delays in contract awards meant that much
of this was still in WIP at the year-end. Revenue from
cloud and software customers amounted to £27.7m
(2019: £26.9m), with a 44% growth in our recurring
cloud subscription services to £6.5m (2019: £4.5m).
The number of contracted seats across our cloud
communication services increased by 31% in the
year to 102,000 at the end of December, although
challenges in accessing customer sites, and COVID-19
The majority of the new seat growth came from our
flagship ICON Communicate service and included a
number of NHS Foundation Trusts, financial services
firms, a large county council and a number of legal
Maintel Holdings Plc Annual Report & Accounts 2020 Strategic report 18
Business review continued
firms. We continue to see significant demand for the
Virtual Private Cloud service that ICON Communicate
offers – with very high (99.999%) core availability,
guaranteed UK data sovereignty and allowing
customers to manage platform change and evolution
at their own pace. We have also seen notable wins
on our ICON Now UCaaS platform, where smaller
organisations value the commercial flexibility it brings,
with short term commitments, mixed bundles of user
types and the ability to flex not just up, but down.
The changes accelerated by the global pandemic
have also driven a rise in the acceptance of public
cloud services – previously more the domain of the
SME and mid-market organisations – and we have
responded accordingly with the addition of three
key public cloud communications services into the
portfolio.
ICON Teams Connector allows customers to add
telephony support to Microsoft Teams while also
supporting critical business applications such as
contact centre, call recording and integration with
key back-office telephony. Launched at the end of
the first half of the year, there are now four customers
on this service and a strong pipeline.
RingCentral Office is a leader in Gartner’s Unified
Communications as a Service (UCaaS) Magic
Quadrant. Maintel has two offers: “Avaya Cloud
Office” – in partnership with Avaya, offering public
cloud UCaaS to existing Avaya UC users; and a direct
relationship with RingCentral for customer acquisition
in both the public and private sectors. We won our first
customers on both variants during the fourth quarter
and the relationship is now a key part of our cloud
go to-market offering.
Revenue
Gross profit
Gross margin (%)
Number of customers
Number of connections
Genesys Cloud is a leader in Gartner’s Contact
Centre as a Service (CCaaS) Magic Quadrant and has
been in Maintel’s portfolio for some time, but with a
renewed emphasis for 2021.
During the fourth quarter, we also released our
Callmedia CX Now CCaaS product which is suitable
for contact centres with fewer than 250 concurrent
agents. Two customers are now deployed on this new
service.
We continue to invest in our growth areas of cloud
and software and have grown the development
teams based at our Technology Centre in Fareham,
Hampshire – bringing the product management and
R&D teams together under the Chief Technology
Officer Dan Davies.
Mobile division
Maintel’s mobile division generates revenue
primarily from commissions received under its dealer
agreements with O2 and from value added services
such as mobile fleet management and mobile device
management.
Revenue increased by 10% to £6.0m (2019: £5.4m)
with gross profits increasing by 4%, albeit at an overall
lower blended margin of 43% compared to 2019.
However average revenue per connection grew
by 13% from 2019.
Maintel’s mobile proposition continues to be
multi-faceted: a vendor agnostic portfolio ensures that
we are always in a position to cater for our customers’
requirements. Our mobile go to market proposition
remains focused on the mid-market enterprise space
(100 – 2,000 connections) where we had another great
year in both retaining and winning net new customers.
The decline in customers overall is a result of our
proactive shift away from SME customers.
2020
£000
5,998
2,595
43%
811
2019
£000
5,430
2,492
46%
848
30,758
31,421
Increase/
(decrease)
10%
4%
(4)%
(2)%
Maintel Holdings Plc Annual Report & Accounts 2020Strategic report 19
O2 continues to be our core partner and route to
market. In addition to O2 we made the strategic
decision to move away from Vodafone Distribution
to Vodafone Direct which enhances our commercial
offering as well as increasing our ability to serve our
customers more effectively and efficiently. Lastly,
our own ICON Mobilise Wholesale offering is ideal
for customers who require an agile solution that
caters for unique billing, network and commercial
requirements.
The Mobile division had a strong year with some
significant net new logo wins from Hitachi Rail, the
British Standards Institute and Kobolt Music on the
O2 network as well as JD Sports via ICON Mobilise,
which is our largest customer on our Wholesale
offering. These customers represent a combined 4,500
connections between them. The pipeline for Mobile
is healthy and we expect to grow revenues further as
we move through 2021.
Government’s Job Retention Scheme in the year
amounted to £0.4m (2019: £Nil).
Income relating to share based remuneration
amounted to a £0.3m credit (2019: £0.3m) due to
the effect of the unwinding of unvested options
accounted for in prior years.
The level of the Group’s administrative expenses
will continue to be tightly controlled in 2021 and we
expect to deliver further cost savings in the period as
our operational model continues to evolve.
Exceptional costs
Exceptional costs of £2.5m (2019: £0.4m) relate to
£1.7m of staff-related restructuring costs associated
with the ongoing review of the Group’s operating cost
base and the recognition of costs associated with an
onerous property lease including impairment of the
lease of £0.6m. A full breakdown is shown in note 13.
Other operating income
Interest
The Group recorded a net interest charge of £1.3m in
the year (2019: £1.3m), which includes £0.2m relating
to IFRS 16 (2019: £0.2m).
Taxation
The tax credit in the period of £0.5m (2019: £1.4m) is
driven by the net effect of deferred tax on PPE and
intangibles of £0.7m offset by other debit movements
of £0.2m.
Other operating income of £0.6m (2019: £1.0m) includes
monies associated with the recovery of one year’s filing
of R&D tax credits of £0.5m (2019: two year’s filing of
£0.8m) and rental income from the sub-letting of a part
of the Group’s London and Haydock premises of £0.1m
(2019: £0.2m).
Other administrative expenses
Other administrative expenses for the Group
decreased by 10% to £23.9m (2019: £26.4m). This was
driven in the main by a 6% reduction in the Group’s
headcount which stood at 559 at 31 December 2020
(31 December 2019: 596) as the Group completed
a programme of reorganisation and right sizing
of the business. This programme will deliver c.£3m
of annualised savings. Support received from the
Other administrative expenses
Other administrative expenses
2020
£000
2019
£000
Decrease
23,879
26,407
(10)%
Maintel Holdings Plc Annual Report & Accounts 2020 Strategic report 20
Business review continued
Dividends and earnings per share
In line with the announcement made on 1 June 2020,
the Board has made the decision to pause dividend
payments until there is more certainty around the
ongoing impact of the pandemic. As such, the Board
will not declare a final dividend for 2020 leaving the
total dividend payment for 2020 at nil pence per share
(2019: 15.1p).
Adjusted earnings per share is at 31.9p, a reduction
of 39% on prior year (2019: 52.6p). On an unadjusted
basis, basic loss per share is at 12.1p (2019: earnings
per share 22.4p).
Consolidated statement of financial position
Net assets decreased by £2.0m in the year to £18.8m
at 31 December 2020 (31 December 2019: £20.8m)
with the key movements explained below.
Intangible assets valued at £59.6m, decreased by
£4.2m, driven by capitalised development costs
associated with the Group’s ongoing investment in
our contact centre software, Callmedia and ICON
platform of £1.2m (2019: £1.0m) and a 3 year renewal
of the Group’s Microsoft licence requirements of
£0.7m, offset by the amortisation charge in the year of
£6.7m (2019: £6.5m).
Right of use assets amounted to £3.8m (2019: £4.1m)
including an onerous lease impairment of £0.4m
(see note 17).
Inventories are valued at £1.9m, a decrease of £1.3m
mainly due to the sale of the Group’s consumable
and spares inventory in December 2020, excluding
document solutions related inventory, as part of the
outsourcing of the Group’s logistics and distribution
activities to a third party.
Trade and other receivables decreased by £4.2m to
£22.8m (2019: £26.9m) driven by lower revenues and
associated billing activity in Q4 2020 compared to
Q4 2019, resulting in reduced trade receivables of
£2.5m and accrued income of £1.8m.
Non-current accrued income per note 19 of
£1.0m (2019: nil) relates to the sale of the Group’s
consumable and spares inventory to a third party
logistics provider on repayment terms over 3 years.
Trade and other payables decreased by £1.9m to
£41.7m (2019: £43.6m) with the main factors being
(i) lower trade payables of £1.5m resulting from a lower
level of project activity in Q4 2020 compared to Q4
2019 combined with a number of different supplier
and delivery timing factors affecting the balance;
(ii) a decrease in deferred managed service income
of £1.1m, driven by a decline in the managed service
base and associated level of advance billings; and
(iii) a reduction in other deferred income of £1.9m
primarily as a result of a lower volume of projects in
delivery phase compared to year-end 2019 offset by
(iv) the impact of deferred VAT on other taxes and
social security of £2.2m.
Borrowings of £22.3m represent the Group’s drawn
down debt and overdraft facility which has been
reclassified to current liabilities as the current facilities
agreement expires in October 2021. At 31 December
2019 the Group’s borrowings of £21.9m, excluding
overdraft, were classified as non-current liabilities
(see note 22).
Non-current other payables of £2.2m (2019: £2.9m)
includes deferred consideration relating to the
previous acquisition of the customer base from Atos
of £1.2m (2019: £2.4m).
Cash flow
As at 31 December 2020 the Group had net debt of
£22.3m, excluding issue costs of debt, (31 December
2019: £25.7m), equating to a net debt: adjusted EBITDA
ratio of 2.3x (2019: 2.2x).
Maintel Holdings Plc Annual Report & Accounts 2020Strategic report 21
2020
£000
9,573
(158)
(2,650)
(53)
(1,105)
5,607
-
(1,096)
4,500
(8,000)
(1,174)
-
(163)
2019
£000
9,741
(328)
(1,902)
-
(1,102)
6,409
(4,953)
(679)
500
-
(1,200)
235
312
(3,696)
(3,988)
14
(20)
(3,845)
(3,696)
(18,500)
(22,000)
(22,345)
(25,696)
9,522
11,840
An explanation of the £3.4m decrease in net debt is provided below.
Cash generated from operating activities before acquisition costs
Taxation paid
Capital expenditure
Issue costs of debt
Interest paid
Free cash flow
Dividends paid
Payments in respect of business combination
Proceeds from borrowings
Repayments of borrowings
Lease liability payments
Issue of ordinary shares
(Decrease)/increase in cash and cash equivalents
Cash and cash equivalents at start of period
Exchange differences
Cash and cash equivalents at end of period
Bank borrowings
Net debt excluding issue costs of debt and IFRS 16 liabilities
Adjusted EBITDA
The Group generated £9.6m (2019: £9.7m) of cash
from operating activities and operating cash flow
before changes in working capital of £7.4m (2019:
£11.1m).
Cash conversion in 2020 remained strong at 123%(c),
including a £2.9m working capital benefit arising from
the HMRC VAT deferral scheme, improving from the
88% conversion level delivered in 2019.
Capital expenditure of £2.7m (2019: £1.9m) was
incurred relating to the ongoing investment in the
ICON platform and IT infrastructure and continued
development of Callmedia, the Group’s contact
centre product, along with a 3-year renewal of the
Group’s Microsoft licence requirements.
Payments in respect of business combinations of £1.1m
(2019: £0.7m) relate to the deferred consideration
amounts due associated with the acquisition of a
customer base from Atos in 2018.
A more detailed explanation of the working capital
movements is included in the analysis of the
consolidated statement of financial position.
Further details of the Group’s revolving credit and
overdraft facilities are given in note 22.
(c) calculated as operating cash flow (being adjusted EBITDA plus working capital) to adjusted EBITDA
Maintel Holdings Plc Annual Report & Accounts 2020 Strategic report 22
Business review continued
Risk management
The Board has overall responsibility for setting the
risk appetite for the business and for ensuring that
the Group’s ongoing risk profile aligns with this.
The Board is also responsible for identifying the
business risks and uncertainties faced by the Group
that could have a material adverse effect on the
business, most of which are beyond its control, and
for determining the appropriate course of action to
manage these. It reviews a dynamic risk report at its
monthly Board meetings, the process behind which
is monitored by the Audit and Risk committee. The
most significant current risks and uncertainties are
described below; the extent of the impact of each
would naturally depend on the precise nature and
duration of the event. This list is not exhaustive and
there may be risks and uncertainties of which we are
currently unaware, or which we currently believe are
immaterial, that could have an adverse effect on
the business.
Nature of risk
How do we mitigate the risk?
Trend
Disruptive technology changes the
landscape of the market and the Group
may not keep pace with product and
service innovation.
A catastrophic event – for example a power
outage or pandemic - means that the
Group is unable to service its customers.
Cyber-attacks on Maintel, customer or
supplier systems rendering them unusable
temporarily or permanently.
Maintel has a dedicated product function to ensure
that the Group’s product and service portfolio
remains competitive. We have also re-structured
the business to ensure focus on accelerating
developments, including those of the ICON platform.
All employees are able to work remotely, and the
Group’s operational and administrative servers
are located and managed such that damage
from an outage is minimised. A business continuity
plan is in place which is reviewed regularly and
enhanced from the results of testing. The Group is
also increasingly moving to cloud based systems
which are more readily available for a response to
a catastrophic event. A fuller explanation of the
Group’s response to the COVID-19 pandemic can be
found on page 24.
The Group has a dedicated security team, a
specialist Security Operations Centre (SOC) and has
invested significantly in training, systems and tools to
ensure Maintel and its customer systems are secured.
Customer networks and data are completely
segregated from the Group’s and data and systems
are replicated in more than one location. Maintel
holds several security accreditations including Cyber
Essentials Plus, ISO 27001 and PCI DSS, all of which
entail extensive external auditing of the Group’s
systems and processes. Maintel is also covered by
cyber threat insurance.
While there is evidence that some cyber criminals
are looking to exploit the COVID-19 pandemic, the
Company is well placed to resist such threats.
Maintel Holdings Plc Annual Report & Accounts 2020Strategic report 23
Nature of risk
How do we mitigate the risk?
Trend
Loss of key supplier through its business
failure or termination of relationship with
Maintel.
Loss of major customer through its business
failure or termination of relationship with
Maintel or Maintel’s partners.
The Group has a multi-vendor strategy to reduce this
risk and has defined product managers who work
closely with each supplier to maintain constructive
relationships and promptly identify potential issues,
formalised by monthly internal review meetings.
We have not identified any immediate elevation
of supplier failure risk as a result of the COVID-19
pandemic or, at the time of writing, seen any
disruption in our supply chains as a result of Brexit.
The impact of this risk is partly mitigated by the
fact that no customer provides more than 10% of
the Group’s revenue. We have developed various
initiatives to manage this risk including executive
sponsorship and improved account management
and engagement. We are actively monitoring
customer churn and continuing to develop our
customer offering and service delivery.
However, we acknowledge that some of our
customers may come under financial stress as a
result of the COVID-19 pandemic (those in the retail
sector, for example) and so we consider this risk to
have been raised since last year. As always, we are
maintaining regular contact with all our customers
in order to identify and respond to particular risks as
early and beneficially as possible.
Risk unchanged from last year
Risk reduced compared with last year
Risk increased compared with last year
The Group’s approach to financial risk management is further explained in note 24 to the financial statements.
Maintel Holdings Plc Annual Report & Accounts 2020 Strategic report
24
Business review continued
• The Board and workforce took a 20% salary
reduction for a three-month period from 1 April 2020
• While many of our employees are designated key
workers, a small number were furloughed while
restrictions meant that there was no on-site work
possible
• The Board made a decision not to declare a final
dividend for the full year 2019 and it is the Board’s
intention to review returns to shareholders when
conditions improve and financial performance
permits, as outlined in the 2019 Chairman’s
statement
Enabling organisations to facilitate flexible and
remote co-working with business continuity support
and delivery is a core competency for Maintel and
we remain engaged in many projects with clients
in both public and private sectors, helping them to
keep critical services running and to increase remote-
working capacity through this period.
Brexit
The Board continued to monitor the potential impact
of Brexit throughout the year and, since the end of the
transition arrangements at the end of December, has
continued to monitor throughout 2021. As expected,
the impacts have been minimal, with some minor
disruption to maintenance stock from one of our
providers initially, which was resolved in February 2021.
COVID-19
The business has robust business continuity plans in
place which enable us to continue our operations in
the face of various adverse scenarios. These were
implemented in response to the instruction to “work
from home” in the first lockdown period and have
functioned well. Since late March 2020, the vast
majority of our employees, except for a small number
of staff based in our warehouses and some on-site
support personnel supporting front-line operations,
have been working remotely, fully supporting our
customers to ensure they have flexible and remote
working solutions in place to protect their own
operations.
While demand for the Group’s services in the first
quarter of 2020 was in line with expectations, quarter
2 saw significant reductions in both technology and
professional services demand, as customers placed
projects on hold in anticipation of an uncertain future.
We also saw a drop-off in “cost per copy” revenue
from our Managed Print Services division as a result of
many workplaces being largely empty.
The board took a number of actions to conserve cash
and maintain a satisfactory liquidity position.
• The Group successfully completed an amendment
and extension of its existing bank facilities with the
National Westminster Bank Plc. The revised facility
of £34.5m provided the Group with more flexible
covenants and additional funding headroom (this
includes a Government backed CLBILs loan of
£4.5m, repayable in October 2021)
• The Executive Management Team had already
started a process before the pandemic to
restructure our business to match our future
business expectations and the needs of our
customers, given the changing technology
landscape. This was completed in the third
quarter of 2020, with an annualised cost
reduction effect across all phases of the
restructuring of £3m
Maintel Holdings Plc Annual Report & Accounts 2020Strategic report 25
Outlook
Although we remain mindful of the potential effect of
the pandemic on project deliveries through the year,
for example in the event of further lock-downs, we are
confident of a return to organic growth on a like-for-
like basis (i.e. excluding the contribution from Agilitas
stock sale and the Managed Print Services business) in
both revenue and EBITDA in 2021.
Performance in Q1 2021, and throughout Q2 to date,
was in line with our expectations and, notwithstanding
the national lockdown in Q4 2020 and again in
Q1 2021, our sales order intake has remained strong,
resulting in a healthy orderbook as we enter the
second half of the year.
The business remains highly cash generative, and we
will continue to implement our transformation strategy
as we focus on the transition to a cloud first and
managed service business, with a focus on retaining
tight control of our cost base and further reducing
leverage whilst continuing to invest for growth through
the launch of new products and establishment of new
partnerships.
Continuing our cloud first and managed service
transformational strategy - which started during 2020
but continues through to 2022 - we will focus on three
strategic imperatives:
• Control – getting better control of our forecasting,
our predictability, our debt and our costs
• Focus – ensuring we are focussed on our core
proposition and skills
• Invest – continuing to invest in our technology,
portfolio, people and skills
The disposal of our Managed Print Services business in
April 2021 was in line with our cloud first strategy.
Control
The changes we made in our organisational structure
in July 2020 – particularly in our sales and operations
functions – have provided significantly improved
visibility of our sales and project pipeline and forecasts,
as well as removing significant operational cost. In
the first two quarters since implementation, we have
delivered on-budget performances for both revenue &
EBITDA and sales order intake.
Having right-sized our cost-base, we continue to
manage our Opex carefully, and have rationalised our
property estate further. The sale of our Managed Print
Services business in April 2021 has further reduced our
debt, with the Group agreeing to extend and amend
its existing facilities agreement with the National
Westminster Bank Plc – giving us further control over
our future.
Focus
Maintel’s acquisitive legacy has created a business
with a very broad set of capabilities – not all of
which are now relevant to our future as a cloud and
managed communication services provider. We have
taken a number of steps to outsource, partner and
cease non-core activities to enable us to maintain a
key focus on what is important:
• The outsourcing of our logistics function in
December 2020 provided us with world-class logistics
capabilities without the management distraction
or overhead of managing the function and
maintaining the necessary premises. It also enabled
us to realise the sale of some maintenance stock,
which contributed £1.3m to our technology revenue
in Q4 2020
• The sale of our Managed Print Services business
to Corona Corporate Services in April 2021 further
enables us to focus on our core cloud and
managed communication services
• We have augmented our services capability through
an extended partnership arrangement with Allvotec,
allowing us to provide a far greater range of on-
premise and remote services to our customers, all of
which are now across a far wider solution portfolio,
leaving us with a variable cost model for services
and further reducing the need to carry non-core
skillsets
• We continue to review, update and amend our
vendor portfolio, to ensure we have the correct
solutions and services to support our key verticals
Maintel Holdings Plc Annual Report & Accounts 2020 Strategic report 26
Business review continued
Invest
Throughout FY20 we continued to invest in our
portfolio of products and services, our people, and
our intellectual property. Elsewhere in this report
we mention strategic new partnerships with both
RingCentral and Genesys – both global leaders in their
markets of UCaaS and CCaaS respectively. We have
also launched multiple new products – ICON Teams
connector, enabling the use of Microsoft Teams;
Secure Homeworker, providing a suite of remote and
branch working services for the modern distributed
workforce; Callmedia CX Now, our own CCaaS service
for the lower end of mid-market, developed in-house
by Maintel Software - and we have continued to
develop our ICON platform for both capability and
capacity, in particular extending the capabilities of
ICON Portal - the tool with which our customers can
now engage with us digitally, which is now being used
by 300 of our customers.
Dividend policy
Given the uncertainty around the duration and likely
impact of the pandemic in early 2020, and the range
of other cost saving measures being implemented
across the business, including reducing salaries from
the Board down, the Board made the difficult decision
to pause dividends. In light of the ongoing disruption
to trading and the financial impact caused by the
pandemic, the Board has again made the difficult
decision not to propose a final dividend for the full
year 2020 (total FY2020 dividend nil pence per share
(2019: 15.1 pence per share)).
It remains the Board’s intention to review returns to
shareholders when conditions improve and financial
performance permits.
Post year end events
On 30 April 2021 the disposal of our Managed Print
Services business unit to Corona Corporate Services
was completed for a consideration of £4.5m payable
in cash on completion, subject to a customary
working capital adjustment. The Company has used
the proceeds from the disposal to strengthen the
Company’s balance sheet through a further reduction
in its debt position.
Banking facilities
On 14 May 2021, the Group signed an amendment
and extension to its current bank facilities with the
National Westminster Bank Plc (“NWB”). The current
facilities, which were previously due to expire
27 October 2021, have been extended for a further
12 months to 27 October 2022. The revised facility
consists of a revolving credit facility (“RCF”) of £25.3m
in committed funds on a reducing basis to term with
the existing £4.5m amortising term loan issued under
the Coronavirus business interruption loan scheme
(“CLBILS”) by the British Business Bank remaining
unchanged, maturing on 27 October 2021. Interest
terms for the RCF are linked to SONIA plus a fixed
margin, whilst on the term loan are linked to the base
rate plus a fixed margin.
Section 172 statement
A director of a company must act in a way that they
consider, in good faith, would most likely promote the
success of the company for the benefit of its members
as a whole, taking into account the factors listed in
section 172 of the Companies Act 2006 (s.172 CA).
Engaging with our stakeholders and acting in a way
that promotes the long-term success of the Company,
while taking into account the impacts of business
decisions on our stakeholders, are central to the
directors’ strategic thinking and duties in accordance
with s.172 CA. We are aware that each stakeholder
group requires a tailored engagement approach
in order to foster effective and mutually beneficial
relationships. Our understanding of stakeholders is then
factored into boardroom discussions, regarding the
potential long-term impacts of our strategic decisions
on each group, and how we might best address their
needs and concerns.
Maintel Holdings Plc Annual Report & Accounts 2020Strategic report 27
Responsible business
The Board’s intention is to behave responsibly and
ethically at all times, in line with our Company values,
and to ensure that our management teams operate
the business in a responsible manner and to the
highest standards of business conduct and good
governance. For further details on our people, please
see page 35.
Business relationships
Our strategy prioritises organic growth, driven by
cross-selling and up-selling services to existing clients
and bringing new clients into the Group. To do this,
we need to develop and maintain strong client
relationships. We value and have continued to
strengthen how we engage with our suppliers during
the year.
For further details on how we work with our clients and
suppliers, please see pages 8-10.
Shareholders
The Board is committed to openly engaging with
our shareholders, as we recognise the importance
of a continuing effective dialogue, whether with
major institutional investors or private shareholders.
It is important to us that shareholders understand our
strategy and objectives, so these must be explained
clearly, feedback heard and any issues or questions
raised properly considered.
For further details on how we engage with our
shareholders, please see page 32.
Throughout this Annual Report, including particularly
the Corporate Governance Report, we provide
examples of how we:
• Take into account the likely consequences of long-
term decisions;
• Foster relationships with stakeholders;
• Understand the importance of engaging with our
employees;
• Understand our impact on our local community and
the environment; and
• Demonstrate the importance of behaving
responsibly.
As part of their induction, directors are briefed on their
duties and they can access professional advice on
these, either from the Company Secretary or, if they
judge it necessary, from an independent adviser. It
is important to recognise that in a large organisation
such as Maintel, the directors fulfil their duties partly
through a governance framework that delegates
day-to-day decision-making to managers and details
of this can be found in our Governance Report on
pages 32-41.
The following paragraphs summarise how the directors
fulfil their duties:
Risk management
Maintel provides business-critical services to its
clients. It is therefore vital that we effectively identify,
evaluate, manage and mitigate the risks we face,
and that we continue to evolve our approach to risk
management.
For details of our principal risks and uncertainties, and
on how we manage our risk environment, please see
pages 22-23, the Audit and Risk Committee Report on
page 34 and the Remuneration Committee Report on
page 42.
Maintel Holdings Plc Annual Report & Accounts 2020 Strategic report 28
Business review continued
Employees
The Board understands how vital our employees
are to the success of our business. During 2020, the
Board engaged with employees through regular
consultations and CEO updates, in addition to
providing our staff a voice on matters that concern
them through a directly elected employee forum.
Maintel also maintains a whistleblowing procedure
and a prevention of modern slavery policy.
For further details on how we engage with our
employees, please see page 33.
On behalf of the Board
Ioan MacRae
Chief executive officer
1 June 2021
Maintel Holdings Plc Annual Report & Accounts 2020Strategic report Corporate Governance
2929
30
Board of directors
John Booth
Annette Nabavi
Nicholas Taylor
Non-executive chairman
Senior independent
non-executive director
Independent
non-executive director
Appointed: 7 June 1996
Appointed: 30 June 2014
Appointed: 1 January 2006
Committee membership:
N (chairman) A R
Committee membership:
R (chairman) A N
Committee membership:
A (chairman) N R
Previous experience:
Annette’s earlier career was spent in
strategy consulting and banking. She
has held the positions of Global head
of telecoms business development
at ING Barings, Managing Director of
XchangePoint Holdings Ltd and she was
a Senior Partner at the PA Consulting
Group where she focussed on strategy
and marketing in the TMT sector.
Previous experience:
Nick has extensive experience of
working with growing organisations,
principally in the media and
communications industries. Having
started his career as a management
consultant working for a US strategy
boutique, he went on to hold several
senior positions – including both CFO
and CEO – spanning private and
quoted businesses as well as the
not-for-profit sector.
External appointments
Annette is a non-executive director
on the Boards of Gemserv Ltd and EFI
Group Ltd, and a director of Women in
Telecoms & Technology (WiTT) Ltd.
External appointments
Nick undertakes a variety of
consultancy work through his company,
Hopton Hill Ltd, and is a non-executive
director of Zinc Media Group Plc.
Previous experience:
John’s career has been spent in equity
investment and broking where he has
held several senior positions including
Head of Equities at Bankers Trust and
co-founder and Executive Chairman of
the Link Group, acquired by ICAP Plc in
2008. He has extensive venture capital
experience and holds a number of non-
executive directorships in investment
management.
External appointments
John is Chairman of the London Theatre
Company, Natilik Ltd and Rinkit Ltd,
a non-executive director of several
private companies in investment
management and a consultant to
Herald Venture Partners. He is also
Chairman of The Prince’s Trust and a
trustee of The Tate Gallery and several
other charities.
Board committees:
N Nomination
A Audit and Risk
R Remuneration
Maintel Holdings Plc Annual Report & Accounts 2020Corporate governance 31
Ioan MacRae
Dan Davies
Mark Townsend CA
Chief executive officer
Chief technology officer
Chief Financial officer
Appointed: 14 October 2019
Appointed: 11 September 2020
Appointed: 7 April 2016
Committee membership:
none
Committee membership:
none
Committee membership:
none
Previous experience:
Ioan has significant sales and
management expertise in the
technology sector which is coupled
with considerable experience in leading
businesses through periods of sustained
growth.
Prior to joining Maintel, Ioan was
Managing Director for the UK and
Ireland of Avaya, a global leader in
communications, and he has held other
senior leadership positions in the industry
both within the UK and internationally
including General Manager, UK, Ireland
and Greece for the Westcon Group.
Previous experience:
Dan was previously Director of Sales
Operations at Maintel and Product
& Solutions Director at both Maintel
and Proximity Communications. Dan
has a background in networking,
customer experience and unified
communications and following is
appointment at Chief Technology
Officer in January 2020, was appointed
to the board in September 2020.
Previous experience:
Mark is a Chartered Accountant
having qualified with Price Waterhouse
(now PWC) in 1988. He has extensive
operational and commercial
experience across FMCG, retail,
construction and rental sectors.
Previously he was group finance
director at Livingston Ltd. During his time
there, he assisted in a successful sale of
the business to a PE-backed acquirer.
Prior to Livingston he was group finance
director at Brogan Group for 5 years
and has held senior finance positions
with Oriflame Cosmetics SA and Pitney
Bowes Ltd.
External appointments
No relevant external appointments
External appointments
No relevant external appointments
External appointments:
No relevant external appointments
Maintel Holdings Plc Annual Report & Accounts 2020Corporate governance 32
Report on corporate governance
Our purpose
The Board’s overriding objective is to produce long-
term value for its shareholders. We believe that this
can best be achieved by understanding and
recognising, alongside our shareholders’ goals, the
legitimate interests of our other stakeholders, and by
ensuring that our conduct is in tune with the
environmental and social concerns of society at large.
We believe that a sound and well understood
governance structure is essential in achieving these
objectives. The Board sets strategy and reviews
operational performance in order to ensure that the
Group’s actions are consistently geared towards
achieving them.
In 2018 Maintel adopted the QCA Corporate
Governance Code (“the Code”) as a benchmark for
measuring our adherence to good governance
principles. The Code sets out ten principles, which
provide a framework for assessing our performance as
a Board and as a company:
The ten Principles of the Code and the
Company’s application of them
1. Establish a strategy and business model which
promote long-term value for shareholders
The Group’s strategy and business model are detailed
in the Maintel Overview section, in particular on
pages 4-14.
The principal risks and uncertainties affecting the
Group are shown on pages 22-23.
2. Seek to understand and meet shareholder
needs and expectations
The Board is committed to providing shareholders with
clear information on Maintel’s financial position and
strategy. We believe that a relationship of mutual trust
between shareholders and the Board is essential for a
well-governed company to achieve its business
objectives.
Twice-yearly meetings are held with larger shareholders
following results announcements, with a developing
programme of contact and meetings with existing and
prospective shareholders outside of the reporting
seasons. The Company’s broker also provides formal
(after the twice-yearly meetings) and informal ad hoc
feedback on shareholder and prospective shareholder
views. During 2020, many of these meetings were held
virtually as a result of the COVID-19 restrictions.
The Group’s broker also produces research following
the two results announcements and any other
significant announcements.
The Company’s AGM usually provides the opportunity
for an exchange of views with private as well as
institutional shareholders. Although we were unable to
hold an open AGM in 2020 due to the restrictions in
place arising from the COVID-19 pandemic, we aim to
hold an open AGM at the earliest opportunity, and the
Board remains committed to providing an AGM for
meaningful dialogue with its wider shareholder base.
Trading updates and other announcements are made
to the market via the Regulatory News Service as
required. Financial reports and other key documents
are available on the Company’s website.
The website also includes contact details for the
Chairman, Chief Executive and Chief Financial Officer,
and the Senior Independent Director makes herself
available to institutional investors should they require
an alternative communications route to the Group.
3. Take into account wider stakeholder and
social responsibilities and their implications for
long-term success
The directors consider a range of stakeholders essential
to the Group’s success: our shareholders, who share in
the success of the company through dividends and
through share price appreciation, and on whose
long-term support the company depends; our
employees, whose talent, dedication and commitment
both to the Company and its customers is essential for
all aspects of our business operations; our customers –
both direct and indirect – whom the Company exists to
serve; our suppliers, who play a critical part in the
products and services provided by the company – be
that via technology or carrier capacity; and the wider
society in which all our stakeholders exist.
Maintel Holdings Plc Annual Report & Accounts 2020Corporate governance 33
Shareholders
As noted under Principle 2 above, the directors maintain
contact with shareholders with a view to understanding
their needs and maximising their long-term returns. In light
of the uncertainty resulting from the arrival of COVID-19,
the Board took the difficult decision to suspend the
payments of dividends – a decision which gave
particular focus to shareholder relations in 2020.
Employees
Maintel’s success is dependent on the knowledge, skill
and engagement of its employees and in 2020
COVID-19 placed considerable additional burdens on
our workforce. Most of our colleagues had to adapt to
working from home at short notice. Some were
furloughed. Many more agreed to reduced working
hours and reduced earnings. Some, engaged in
servicing our NHS customer base and other essential
services even at the height of the pandemic, were
working in extremely difficult circumstances and in high
infection-risk environments. Some roles were regrettably
made redundant as a result of the pandemic’s impact
on the Group’s trading experience.
Consequently, there has been an even greater
emphasis than usual on staff welfare and staff
communications – at a time when remote working
made both inherently more difficult. Our regular
internal communications channels, which include a
quarterly e-mail update and direct consultation with a
directly elected employee forum, were bolstered by
an enhanced programme of online town hall
meetings and video updates from the CEO and other
members of the executive management team. The
Group’s employee representative and engagement
forum, “Maintel Matters”, met virtually at regular
intervals throughout the year, with regular attendance
by the executive directors. At these forums, employee
views on proposed actions were sought and gained –
informing Board decision making on matters such as
the use of furlough, the reduced working week,
appropriate measures required to support home
working and the support for employees managing
multiple responsibilities such as childcare, support for
schooling at home, the care of elderly and vulnerable
relatives, and in some cases severe illness and
bereavement as a result of the pandemic.
Additional information about the Group’s employment
policies can be found on page 49.
Customers
The Group’s product and service offerings are described
in the Maintel Overview section on pages 4-14, and
these are sold by both a new business sales team and
account managers who service existing customers. In
addition to other contact points such as project
managers for installations and customer service teams,
communication with customers and prospects also
occurs via social media feeds, blogs, events,
conferences and exhibitions. During 2020 the Company
launched a new website with better access to relevant
information for customers and prospects. A customer
newsletter is sent regularly to all subscribing customers
keeping them informed of important updates and
developments and key customers have an allocated
executive sponsor.
With the impact of the pandemic rendering traditional
forms of customer meeting impossible, the Board took
steps to ensure that strong lines of communication
were kept with major customers. An Executive
Sponsorship programme was re-invigorated, driven
principally by the executive directors, allowing the
Group to communicate its activities and offers directly
to the senior decision makers within the most significant
customers, and hearing first-hand how those customers
were themselves responding to the pandemic and
using that feedback to inform decision making around
product portfolio, managed service offerings and
staffing levels.
Our success depends on our ability to provide the
products and services that our clients need – when
they need them. Those needs are not static, and the
Group has placed additional emphasis in recent years
on developing a more holistic approach to
understanding our customers’ businesses so that we
can offer them business-enabling solutions rather than
just technology. In 2020 this meant helping our
customers to adapt to a remote workforce, providing
secure homeworking and dispersed contact centre
solutions among others. To assist with this, the
Company developed a COVID-19 section of the
website to provide customers with guidance on
Maintel Holdings Plc Annual Report & Accounts 2020Corporate governance 34
Report on corporate governance continued
managing the transition to remote and COVID-Secure
working, and also ran a number of webinars providing
specific guidance throughout the year.
4. Embed effective risk management,
considering both opportunities and threats,
throughout the organisation
Suppliers
Contacts are maintained at senior level with all the
Group’s main suppliers. The Group also employs
product managers to monitor the changing products
and services of existing and potential new suppliers
and manage relationships with them. Key suppliers
have an allocated executive sponsor, and throughout
the year regular virtual communication was in place to
ensure good operations between the Company and
its business partners for managing both the pandemic
and preparation for any Brexit contingency planning.
These key relationships enabled the executive
directors to inform the Board about the view of the
market from the perspective of suppliers, and also
represented a major part of the data reviewed at the
Board’s Annual Strategic Review in September 2020.
Other
The Board recognises the responsibilities it has not only
to those stakeholders with whom it interacts directly
but also to the wider social ecosystems in which it
operates. Global challenges, whether short-term such
as COVID-19 or long-term such as global warming,
require all citizens – corporate and individual – to play
their part. We are proud in the role that Maintel was
able to play in 2020 to support its NHS clients and other
frontline services.
We are also committed to minimising our carbon
footprint and wider impact on the environment, as
evidenced by our ISO14001:2004 accreditation for
environmental management systems. The increased
use of homeworking and videoconferencing that were
a response to COVID-19 will not be fully reversed when
the pandemic is behind us. In 2020 the Board resolved
to review both its real estate footprint and its employee
car allowance policy in 2021 (the Company’s own
vehicle fleet has already been substantially reduced);
both initiatives will allow the Group to reduce its carbon
footprint.
The Board annually reassesses its risk appetite across
eight areas of operations:
• Financial
• Health & Safety
• Environmental
• IT security
• Legal and regulatory compliance
• Strategic suppliers and partners
• Sales and competition
• HR/personnel
This exercise determines the risk profile the business is
prepared to apply to achieve medium- to long-term
success, and the Board’s monthly review of the
Group’s risk register is undertaken in light of this
risk appetite.
The Audit and Risk committee is responsible for the
monitoring of risk, including reviewing the effectiveness
of the risk management process annually; its report on
pages 39-40 further describes its responsibilities and
actions taken during 2020. The Board was encouraged
by the way in which this overall risk management
process proved able to respond to the rapid arrival of
COVID-19. Although the virus itself was unanticipated,
the Company had a robust disaster recovery plan in
place which included all of the tools needed to address
the move to remote working, while the risk
management framework easily accommodated
management of the risks specific to an infectious virus.
The principal risks affecting the Group are described
on pages 22-23.
Maintel Holdings Plc Annual Report & Accounts 2020Corporate governance 35
5. Maintain the Board as a well-functioning,
balanced team led by the chair
The structure of the Board of directors is described on
pages 38-39.
The Nomination committee met following the
resignations of two executive directors to consider the
makeup of the board. It concluded that an established,
experienced and balanced Board was in place, with a
non-executive chairman, two non-executive directors
and two executive directors still in place – but that the
Board would benefit from more technical knowledge.
This was resolved in September 2020 with the
appointment of Dan Davies, the executive Chief
Technology Officer, to the Board.
The Remuneration committee sets each executive
director personal and Group profitability targets
annually and measures performance against both
these and effectiveness generally. Led by the Senior
Independent Director (SID), the non-executive
directors also meet without the Chairman present to
discuss his performance.
Each non-executive director must be able to devote
sufficient time to the role in order to discharge his or
her responsibilities effectively. The Chairman assesses
the time commitment of the NEDs as part of the
annual review of their effectiveness, and the SID
reviews the time commitment of the Chairman.
The Company has effective procedures in place to
monitor and deal with conflicts of interest. The Board is
aware of the other commitments and interests of its
Directors, and changes to these commitments and
interests are reported to and, where appropriate,
agreed with the rest of the Board.
The annual review of the schedule of matters reserved
for the Board was also undertaken by the Board, in
February 2021.
The directors are agreed that, as described in the
Board of directors section on pages 38-39, the non-
executive directors exercise independent judgement,
challenge the executive directors effectively, and that
they commit sufficient time to the fulfilment of their
duties as directors of the Company. To that end, the
Board is satisfied that it complies with the Code’s
recommendation that the Board contain at least two
independent non-executive directors.
Terms of reference of the Remuneration, Nomination
and Audit and Risk committees are summarised on
pages 39-41 and on the Company’s website,
maintel.co.uk. The directors believe that, given the
external roles they hold and have held, together with
the knowledge and insight gained as directors of
Maintel, the members of each committee have the
appropriate experience to fulfil their committee
responsibilities.
The record of directors’ attendance at Board and
committee meetings during 2020 can be found on
page 40.
6. Ensure that between them the directors have
the necessary up-to-date experience, skills and
capabilities
The directors’ biographies on pages 30 and 31 show the
depth of skills and experience of each director, which
the Board believes represents an appropriate balance.
The Board believes that its members are able to keep
abreast of technological change with attendance at
industry events and regular interaction with suppliers,
customers and counterparts in other TMT companies,
supported by a management team with frontline
technical capabilities. Non-technical expertise is
maintained and developed through attendance at
financial, legal and other corporate events and regular
liaison with advisers, together with input from senior
internal sources including the Company Secretary.
New directors receive an induction on their
appointment to the Board which covers amongst
other things the activities of the Group and its key
business and financial risks, the schedule of matters
reserved for the board, the terms of reference of the
committees and the latest financial performance of
the Group. During the year, Dan Davies joined the
Board on his promotion to Chief Technology Officer,
a role that the Nomination Committee considered to
be central to the strategic development of the Group
and his induction included a detailed introduction to
the responsibilities of a Company Director.
Maintel Holdings Plc Annual Report & Accounts 2020Corporate governance 36
Report on corporate governance continued
The Company has employed the services of ONE
Advisory Limited to assist the Board and senior
management with advice on the AIM Rules, QCA
Code compliance and the maintenance of good
standards of governance.
The Board regularly reviews the appropriateness and
opportunity for continuing professional development
whether formal or informal.
7. Evaluate Board performance based on clear
and relevant objectives, seeking continuous
improvement
Board effectiveness is evaluated in several ways. The
Nomination committee meets annually to review the
structure, size, composition and effectiveness of the
Board, and is also responsible for making
recommendations on changes to Board membership.
The Chairman and Chief Executive Officer also discuss
the performance of the Board as a whole, while the
Remuneration committee reviews the performance of
the executive directors individually against annual
performance objectives defined for the purposes of
bonus eligibility criteria; the latter are described in the
Remuneration committee report on page 42. Bonus
eligibility is dependent on Group financial performance
combined with individual role-specific objectives which
are tailored to Group requirements for that year.
In February 2021 the Board carried out a formal
evaluation process involving both the executive and
non-executive members and a number of improvement
projects are underway, focussed on succession
planning and broadening the diversity of both the
Board and the Executive Management Team.
The Board does not consider that any executive
director is indispensable, with a sound second tier of
operational management capable of assuming
operational duties in the absence of a Board member
and succession planning at all levels being a key
component of our People Strategy.
Directors retire in accordance with the Company’s
articles of association on a three-year rotational basis
and in accordance with corporate governance
recommendations if these require a shorter period, their
reappointment being subject to shareholder approval.
8. Promote a corporate culture that is based on
ethical values and behaviours
The Board recognises the importance of establishing
and maintaining a consistent, positive corporate
culture, aligned to the Maintel Values. The Group
promotes a defined set of Maintel Values, framing the
culture of the Group in a range of areas. These values
are designed to be applied to all aspects of the
Group’s operations, are regularly communicated to
staff, enshrined in the Company Handbook and set
out separately on the Group intranet.
Key elements of the values include integrity, creativity
and agility in customer delivery, and personal
development in an enjoyable work environment,
which the Board considers particularly important to the
ongoing profitability and growth of the Group by way
of attracting and retaining satisfied customers and
employees. The values also allow other stakeholders to
assess the quality and aspirations of the Group.
The directors are committed to nurturing an open and
communicative culture which encourages employee
participation in the exchange of ideas, information and
suggestions. The culture is also conveyed throughout the
Group by way of regular employee newsletters and an
employee forum, together with interactive presentations
by the executive directors to employees across the
Group’s offices. With so many people working from
home during 2020, these sessions continued online; those
employees who could joined the sessions live but they
were also recorded for employees to view after the
event. Answers to questions posed were circulated
across the Group by email.
As required by law, the Group adheres to Anti-bribery
and Anti-slavery legislation; it is also ISO14001:2015
certified, has been awarded Eco Vadis Silver Medal for
sustainability and reports on its environmental policies
on page 49.
9. Maintain governance structures and processes
that are fit for purpose and support good
decision-making by the Board
The Board has overall responsibility for all aspects of
the business. The Chairman is responsible for the
Company’s governance, including overseeing the
Maintel Holdings Plc Annual Report & Accounts 2020Corporate governance 37
running of the Board, and ensuring that no individual
or group dominates the Board’s decision-making. The
Chief Executive is responsible for the management of
the Group. The Board has delegated the day-to-day
running of the Group to the Chief Executive within
certain limits, above which matters must be escalated
to the Board for determination in line with the schedule
of matters reserved for the Board. The SID’s role is to
act as a sounding Board for the Chairman, to serve as
an intermediary for the other directors where
necessary and to be available to shareholders should
they have concerns they have been unable to resolve
through normal channels, or when such channels
would be inappropriate. The Board’s governance is
continually reviewed as the Company grows
and evolves.
The Board is supported by a Remuneration committee,
a Nomination committee and an Audit and Risk
committee, whose terms of reference are reviewed
regularly. Further information on the roles of these
committees, together with reports of their activities
during the year, are included on pages 39-47.
Other structures and processes underpinning the
governance of the Group and its compliance with the
Code are described throughout this report:
• Schedule of Matters reserved for the Board (Principle 5)
• Terms of Reference of Remuneration committee,
Nomination committee and Audit and Risk
Committee (Principle 5)
• Risk appetite (Principle 4)
• Maintel Values (Principle 8)
• Anti-bribery policy (Principle 8)
• Anti-slavery policy (Principle 8)
• ISO14001:2004 (Principle 8), ISO9001:2015,
ISO 45001:2018 and ISO27001:2013
• Streamlined Energy and Carbon Reporting (SECR)
(Principle 8)
• EcoVadis Sustainability (Principle 8)
• Shareholder communications (Principle 2).
All governance policies are subject to regular review.
10. Communicate how the company is governed
and is performing by maintaining a dialogue with
shareholders and other relevant stakeholders
The descriptions of the Group’s application of
Principles 2 and 3 on pages 32-34 explain the primary
modes of communication with its shareholders and
other stakeholders. The Strategic Report on pages 4-28
provides details of the Group’s performance.
The Board is committed to maintaining effective
communication and having constructive dialogue
with its shareholders, and aspires to have close
ongoing relationships with its private shareholders,
institutional shareholders, and analysts and for them to
have the opportunity to discuss issues and provide
feedback at meetings with the Company. The Board
maintains that, if there is a resolution passed at a
general meeting with 20% votes against, the Company
will seek to understand the reason for the result and,
where appropriate, take suitable action. At the Annual
General Meeting in 2020, all resolutions passed with at
least 95% support on a poll.
All corporate announcements including our Corporate
Governance Statement can be found on the
Company website, maintel.co.uk/investors, as can all
Annual Reports and Interim Statements and Notices of
General Meetings.
Three key committees of the Board also play a
significant role in the governance of the Group – the
Audit and Risk Committee, the Nomination Committee
and the Remuneration Committee. Each committee’s
remit is defined by its Terms of Reference, which are
reviewed by the Board annually. The reports of each
of these committees can be found on pages 39, 40
and 42.
More detailed descriptions of the Group’s corporate
governance processes are given later in this report
and in the report of the directors.
Maintel Holdings Plc Annual Report & Accounts 2020Corporate governance 38
Report on corporate governance continued
Board of Directors
The Group is governed by the Board, whose
composition changed during 2020. It is comprised of
3 executive and 3 non-executive directors. The
executive directors are Ioan MacRae (Chief Executive
Officer), Mark Townsend (Chief Financial Officer) and
Dan Davies (Chief Technical Officer), who joined the
Board in September 2020. The non-executive directors
are John Booth (Chairman), Annette Nabavi (Senior
Independent Director), and Nicholas Taylor. The Board
is supported by the Company Secretary, Rufus Grig,
who is also the Company’s Chief Strategy Officer, and
who was appointed as Company Secretary in June
2020. The Company contracted the services of ONE
Advisory Limited with effect from July 2020, to provide
further support to the company secretarial function.
During the year two executive directors, Kevin Stevens
and Stuart Legg, and the former Company Secretary,
Winifred Chime, left the company and non-executive
director Angus McCaffery left the Board in December.
Since the period end, the Senior Independent Director,
Annette Nabavi, has also indicated that she will not be
seeking re-election and in addition Maintel has
appointed One Advisory Limited as its Company
Secretary following the resignation of Rufus Grig in
May 2021.
The Chairman is responsible for the effective running of
the Board, which reviews its effectiveness on an
ongoing basis. The Chief Executive is ultimately
responsible for all operational matters and the
financial performance of the Group.
The 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 is
satisfied that the broad range and depth of
experience and individual strength of character of
each of the non-executive directors underpins their
ability to exercise independent judgement and apply
unbiased rigour to Board decisions. It is also satisfied
that they commit sufficient time to the fulfilment of
their duties as directors of the Company.
The Board acknowledges that the shareholdings and
length of service might be seen to compromise the
independence of two of the non-executive directors.
The Board has considered the issue of independence
at length and has taken soundings from institutional
investors and concluded that all three non-executives
act independently and are demonstrably able to
challenge the rest of the Board. Further, the Board
considers that the longevity of tenure of some of the
directors gives them valuable understanding of the
business and industry, and that the non-executive
directors’ shareholdings align their interests with those
of other shareholders and stakeholders.
The directors’ biographies on pages 30-31 demonstrate
the experience they bring to the Group.
The Board meets regularly, normally monthly, and
reviews performance and assesses future strategy for
the operating units and for the Group as a whole. It
operates to a schedule of matters specifically reserved
for its decision. This schedule requires that specific
matters are referred to the Board for consideration
and approval, including those relating to the overall
leadership and management of the Group, budgets,
strategy, performance against objectives, significant
capital expenditure and contracts, external financial
reporting, dividend and treasury policies, overall
systems of internal controls and risk management,
remuneration and governance, along with any
significant proposed changes to business operations or
to the structure or capital of the Company. The full
schedule of matters reserved for the Board’s decision is
available from the Company Secretary.
During the year, the Chairman also held meetings with
the other non-executive directors in the absence of
the executive directors, and with the Chief Executive
in the absence of the other non-executive directors.
The non-executive directors also met in the absence of
the Chairman.
The directors are required by the Company’s articles to
retire on a three-year rotational basis, and to stand for
reappointment by shareholders at the AGM. Although
not required to retire this year in accordance with the
articles, corporate governance guidance recommends
that non-executive directors with more than 9 years’
Maintel Holdings Plc Annual Report & Accounts 2020Corporate governance 39
service are re-elected annually, and John Booth and
Nicholas Taylor offer themselves for re-election. The
Board’s view is that both directors bring a valuable
perspective to the Board, exercise independent
judgement and effectively challenge as well as support
the executive directors. Dan Davies, who joined the
Board in September 2020, will offer himself for election.
In accordance with its articles, the Company provides
an indemnity to all the Company’s directors in respect
of all losses arising out of or in connection with the
execution of their powers, duties and responsibilities as
directors. The Group also maintained insurance cover
during the year for its directors and officers and those
of subsidiary companies under a directors’ and
officers’ liability insurance policy against liabilities that
may be incurred by them while carrying out their
duties. In each case, the directors remain liable in the
event of their negligence, default, breach of duty or
breach of trust.
The directors are able to seek independent
professional advice as necessary, at the Company’s
expense within designated financial limits and from
time to time they do exercise this facility.
The following Board committees deal with specific
aspects of the Group’s affairs, reporting their
deliberations and conclusions to the Board
as appropriate.
Audit and Risk committee
Membership of the Audit and Risk committee is restricted
to non-executive directors and comprises Nicholas Taylor
(chair), John Booth and Annette Nabavi.
The Board is satisfied that for the year under review and
thereafter, Nick has adequate recent and relevant
commercial and financial knowledge and experience
to chair the committee. It also considers that Annette
and John have such knowledge and experience.
The remit of the committee includes:
• considering the continued appointment of the
external auditors, and their fees, terms of engagement
and independence, including the appointment of the
auditors to undertake non-audit work;
• liaising with the external auditors in relation to the
nature and scope of the audit;
• reviewing the form and content of the financial
statements and any other financial announcements
issued by the Group, including consideration of
significant issues, judgements, policies and disclosures;
• reviewing any comments and recommendations
received from the external auditors and considering
any other matters which might have a financial
impact on the Group;
• reviewing the Group’s risk management reporting
processes that identify, report and monitor corporate
level risks and considering annually the requirement
for an internal audit function; and
• reviewing the Group’s statements on internal control
systems and risk management processes.
The Audit and Risk committee met three times during
2020. Attendees at committee meetings included the
Chief Financial Officer, Chief Executive Officer, Group
Financial Controller and representatives of the external
auditors. All of these attended at the invitation of the
chairman of the committee to facilitate the conduct
of the meetings. During the year the committee also
liaised informally with the executive directors and met
with the external auditors in the absence of executive
management.
The principal issues addressed by the committee
during the year were:
• the external auditors’ year-end report for 2019, their
observations on the internal financial controls arising
from the annual audit, the review of the Group’s 2019
results and the disclosures in the 2019 annual report;
• the amendment and extension of the Group’s
lending facilities (including its application for a loan
under the government-backed Coronavirus Large
Business Interruption Loan Scheme (CLBILS));
• the financial impact of – and the Group’s response
to – the COVID-19 pandemic;
Maintel Holdings Plc Annual Report & Accounts 2020Corporate governance 40
Report on corporate governance continued
• the announcement of the half-year results;
• the external audit plan for the 2020 financial
statements, which included a review of the audit
objectives, scope, timetable and deliverables;
• the appointment of RSM UK Audit LLP as external
auditors in respect of the 2020 results, their
independence and objectivity and their fees, oversight
of arrangements to familiarise RSM UK Audit LLP with
the Group’s operations, controls and processes;
• regularly reviewing the output and operation of the
risk reporting process and undertaking the annual
review of the risk reporting process; and
• undertaking the annual review of the need for an
internal audit function.
The auditors are 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
Board attendances
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 7 of the financial statements.
It is the company’s policy to periodically review the
appointment of the auditors, considering factors such
as audit quality, value for money and period of tenure.
The current auditor’s tenure commenced for the year
ended 31 December 2019.
Remuneration committee
Annette Nabavi is chair of the Remuneration
committee, its other members being John Booth and
Nicholas Taylor. The committee met four times during
the year. The committee’s report to shareholders on
directors’ remuneration is set out on page 42.
The following table shows the attendance of the directors at meetings of the Board and the Audit and Risk,
Remuneration and Nomination committees during the year.
Board
Audit and Risk
committee
Remuneration
committee
Nomination
committee
Number of meetings in the year
J Booth
S Legg (resigned as a director on 30th June 2020)
I MacRae
A McCaffery (resigned 11th December 2020)
A Nabavi
K Stevens (resigned 30th June 2020)
N Taylor
M Townsend
D Davies (appointed 11th September 2020)
19
19
6
19
17
19
7
19
15
6
3
3
–
–
–
3
–
3
–
–
4
4
–
–
–
4
–
4
–
–
2
2
–
–
–
2
–
2
–
–
In addition to the regular monthly meetings, additional Board meetings were held during the year relating to the
approval of the 2019 year end and 2020 interim results, the approval of the issuing of a trading update, the impact
of the Coronavirus and the Group’s response to it, changes to the Group’s finance facilities, the resignations of Kevin
Stevens, Stuart Legg, Angus McCaffery and Winifred Chime and the appointments of Dan Davies and Rufus Grig.
Maintel Holdings Plc Annual Report & Accounts 2020Corporate governance 41
The executive directors monitor key performance
indicators on a monthly basis, management of these
being delegated to the Group’s senior management.
The key operational functions of the Group are subject
to processes established and independently externally
audited and held within the Maintel integrated
Management System which encompasses multiple
certifications including ISO9001:2015-Quality,
ISO45001:2018-Health and Safety, ISO27001:2013-
Information Security, ISO14001:2015-Environmental,
PCI-DSS, Cyber Essentials Plus, EcoVadis Sustainability
and Safe Contractor SSIP, which the directors consider
to be a valuable additional internal and external
control tool of the business.
Conflicts of interest
The Group has established procedures for the
disclosure and review of any conflicts, or potential
conflicts, of interest which the directors may have and
for the authorisation of such conflict matters by the
Board. The Board considers that these procedures are
operating effectively.
Nomination committee
John Booth is chair of the Nomination committee, its
other members being Annette Nabavi and Nicholas
Taylor. The committee’s terms of reference include:
• reviewing the structure, size, composition and
effectiveness of the Board; and
• identifying and nominating suitable candidates to fill
vacancies on the Board.
The committee met twice during 2020.
In the light of the departure of Kevin Stevens and
Stuart Legg, the Committee considered the makeup of
the board considering both the level of technical and
market knowledge, and the representation of the
Executive team and recommended that Dan Davies,
appointed as Chief Technology Officer in January, be
appointed to the board. Dan brings significant
experience in both operations and technology to the
Board and will be offering himself for election at the
AGM. His biographical details can be found on page 31.
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 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. These were particularly
important during 2020 given the widespread impact
on the Group’s finances of the COVID-19 pandemic.
Maintel Holdings Plc Annual Report & Accounts 2020Corporate governance 42
Report of the Remuneration committee
On behalf of the Board, I have pleasure in presenting
the report of the Remuneration committee for 2020.
This year has been one of change at Maintel. The
Chairman’s statement on page 2 provides an
overview of the changes and the Company’s strategy
can be found on pages 4-28.
The information in this report is structured as follows:
• details of how the current remuneration policy has
been applied in 2020;
• how the remuneration policy will be applied in 2021;
and
• an analysis of the remuneration policy and its
alignment to Group strategy, setting out the key
elements of this policy.
The Remuneration committee is committed to
structuring senior executive remuneration that is
competitive, incentivises and rewards good
performance, and that will help the Company
continue to grow profitably, thereby creating value for
shareholders. Each year the remuneration framework
and the packages of the directors are reviewed to
ensure they continue to attract, retain and motivate
executives and drive towards this objective.
The committee’s remit is to determine and agree with
the Board:
• the broad policy regarding remuneration of the
executive directors and certain senior managers;
• the individual remuneration and incentive packages
for executive directors; and
• in consultation with the Chief executive, the
remuneration packages for key senior managers
including the share incentive plans and
performance related pay schemes and oversight of
the benefit structures across the Group.
The committee has access to independent, professional
advice as necessary, at the Company’s expense.
During the year, the membership of the committee
comprised three non-executive directors: Annette
Nabavi (chair), John Booth and Nicholas Taylor. The
committee met on four occasions in 2020.
Application of the remuneration
policies in 2020
A general Company-wide salary increase envelope of
2% was agreed by the board as part of the 2020
budgeting process. However, the Remuneration
Committee decided to apply more modest increases
for each of the executive directors, effective from
1 February 2020. Increases ranged from 1.15% for Stuart
Legg to 1.72% for Ioan MacRae. These more modest
increases reflected salary increases from 2019,
commission payments for Stuart Legg and general
benchmarking information. The fees for the
non-executive directors were not increased and
remained at their 2019 levels.
During the year both Stuart Legg and Kevin Stevens
left the company. Both directors left on 30th June 2020
on similar terms to those agreed with Eddie Buxton in
2019. These terms included normal contractual terms
including Pay in Lieu of Notice as well as a settlement
payment, in line with company policy. The 12,009
options over Ordinary Shares granted to Stuart Legg
on 27th April 2016 and which vested on 27th April 2019
remained exercisable for 6 months post termination. All
other options held by Stuart Legg lapsed on the
termination date. The 10,000 options over Ordinary
Shares granted to Kevin Stevens on 30th May 2014 and
which vested on 14th May 2014 together with the
18,409 options over ordinary shares granted to Kevin
Stevens on 27th April 2016 and which vested on
27th April 2019 and the 833 options over Ordinary
Shares granted to Kevin Stevens on 10th April 2017 and
which vested on 20th April 2020 remained exercisable
for 6 months following the termination date. All other
options held by Kevin Stevens lapsed on the
termination date.
Short term performance for senior executives is
incentivised using an annual bonus scheme based on
the achievement of both financial and non-financial
goals. Executive directors’ bonuses for 2020 were set at
Maintel Holdings Plc Annual Report & Accounts 2020Corporate governance 43
between 10% and 50% of base salary. Based on the
financial performance achieved in 2020, proportionate
annual bonuses have been paid to both the Executive
Directors and senior members of the management
team. These varied from between 1% and 13% of
base salary.
Long term performance for senior executives has, over
the last 3 years, been incentivised by way of an LTIP
granting nominal cost options which vest based on the
achievement of specific criteria. The Company has
also issued market value options, with no performance
criteria attached, to some of its senior management
team. All share-based incentives offered to executive
directors and senior managers have three-year
performance periods and are subject to continuing
employment. Further information can be found on
pages 46-47.
In June 2020 Mark Townsend was awarded 10,000
ordinary shares in line with the agreement reached
with him when he revoked his resignation in mid-2019.
A further 5,000 ordinary shares were awarded to him in
June 2020 when the bank refinancing exercise was
completed.
Market priced share option grants of 5,000 were made
in February 2020 to Ioan MacRae, Mark Townsend and
Rufus Grig. Market priced share options grants of 5,000
were also made to Stuart Legg, Kevin Stevens and
Jennie Cronin. The grants to these 3 individuals have
now lapsed as they have left the company.
In August 2020 Dan Davies was invited to join the
Maintel board as he is considered a key contributor to
the success of Maintel’s 3 year strategy. Dan Davies’
salary was increased to £170,000 from 1st September
2020. His variable commission payment targets set in
February 2020 remained in place for the duration of
2020 and as a consequence he has received £17,600
in commission payments of which £11,000 has been
paid since he was appointed to the board. He was
also granted 50,000 market value options over ordinary
shares on 17th September 2020. These options will not
vest until 31st December 2023.
How the remuneration policy will be
applied in 2021
The committee has reviewed salary levels in the light of
inflation, market comparators, individual and
collective performance, as well as any changes in role
or responsibility by any of the executive directors and
agreed an average salary increase of 2% for the
executive directors, in line with Company-wide salary
increases.
Annual bonus targets have been the subject of review
and we have concluded that these will continue to be
based on specific KPIs that the Group is using to
underpin its growth, in addition to Group financial
performance. These include measures to increase the
Group’s productivity, customer feedback metrics and
metrics which measure progress in our cloud-based
offerings. Annual bonus targets are in the range of
35%-50% of base salary. The board has also agreed the
principle of discretionary bonuses over and above
these percentages should the company overachieve
its budget adjusted EBITDA target.
We have also reviewed the LTIP awards for 2021. The
Committee has decided to continue to incentivise
senior executives, using market value options rather
than nominal cost options linked to long term criteria
because of the issues around setting long term
conditions which are fair and meaningful. All options
will continue to be subject to a three-year vesting
period. We feel this will be both a simpler and a fairer
approach and executive directors will be completely
aligned in their long-term incentive to achieve share
price increases. Details of the LTIP awards made in
2020 and 2021 can be found on page 46.
Remuneration policy analysis
The Group operates in large competitive markets with
areas of significant growth potential. The Group’s
executive director remuneration policy is designed to
attract, reward, incentivise and retain directors of the
calibre required to maintain the Group’s position in its
marketplace.
Maintel Holdings Plc Annual Report & Accounts 2020Corporate governance 44
Report of the Remuneration committee
continued
The key features of remuneration and the policy for each element of the packages for executive directors are
shown in the table below:
Element of
remuneration
Base salary
Benefits
Bonus
Purpose and link to strategy
Policy and approach
To pay a competitive sustainable
level of fixed remuneration, taking
into account experience and
personal contribution to the
Group’s strategy. Intended to
attract and retain the talent
(management and technical)
required to execute the strategy.
These complement an executive’s
basic salary and are designed to
ensure the well-being of
employees.
A cash bonus designed to
incentivise specific short-term
goals and objectives, both
financial and non-financial.
Reviewed annually by the committee in January. Salary
increases will normally be in line with pay review levels across
the whole Group. However, reference is also made to
changes in role and responsibility and to comparisons with
companies of similar size and complexity.
Benefits comprise pension contribution (typically 3% of basic
salary), car allowance, and membership of private health,
permanent health and life assurance schemes.
Goals and objectives are set individually with a significant
weight being put on meeting annual budget adjusted EBITDA
targets. Other objectives include KPIs designed to increase
the overall productivity of the Group and KPIs focussed on
ensuring the Group’s move to cloud-based solutions is
achieved.
Executive directors’ bonus targets are set at between 35% and
50% of base salary.
Long term
incentive plan
(LTIP)
To encourage and reward
delivery of the Group’s long-term
growth objectives and provide
alignment with shareholders
through the use of share-based
incentives.
All share-based incentives offered to executive directors have
minimum 3-year vesting schedules.
Share-based incentives going forward will be based on
market value options which ensures that executive directors’
incentives will be completely aligned with the achievement
of share price increases.
The plan rules include amongst other things claw-back and
malus provisions and a limitation to ensure that new shares
issued, when aggregated with all other employee share
awards, must not exceed 10% of issued share capital over any
ten-year period.
When granting options, the committee considers the potential
value that will be created under the performance conditions
attached to the grant.
Maintel Holdings Plc Annual Report & Accounts 2020Corporate governance 45
The Remuneration committee considers that the levels
of bonus and LTIP payable are sufficient, but not
excessive, to motivate the directors whilst being
proportionate to the long-term value created for the
benefit of shareholders.
In addition a number of risks are taken onto account
when setting remuneration policy:
• overall remuneration packages will not attract the
right level of people to ensure that Maintel can
achieve its 3 year strategy: the remuneration
packages are benchmarked against both Maintel’s
key competitors and against industry benchmarks
to ensure that they are at a competitive and
fair level.
• bonus payments are not aligned to company
success: bonus KPIs are set each year and are fully
aligned to the corporate KPIs required to achieve
the company’s goals. If these KPIs are not met,
bonuses will be attenuated or not paid at all.
• share option schemes vest even if the company has
not achieved its goals: share option schemes are
now all based on market priced options. They are
therefore fully aligned with share price performance.
The schemes also have claw-back and malus
provisions as a further protection.
Details of LTIP awards granted during the year can be
found on page 46.
Directors’ service agreements
Executive directors’ service agreements, which include
details of remuneration, will be available for inspection
at the annual general meeting. Each executive
director has a six-month rolling service agreement.
Copies of the Directors’ service agreements and letters
of appointment are also kept available for inspection
at the Company’s registered office, 160 Blackfriars
Road, London, SE1 8EZ.
Non-executive directors
The non-executive directors each has a contract
terminable on 3 months’ notice.
The level of remuneration of the non-executive
directors is recommended by the executive directors
to the Board and is based upon the level of fees paid
at comparable companies and taking account of the
directors’ evolving responsibilities. Taking these factors
into account, the remuneration of the non-executive
directors was reviewed in February 2020 and it was
agreed that their fees would not increase. From April
2020 onwards, the Non-Executive Directors also
agreed to take a 20% decrease in their fees in line with
the Executive members of the board for a minimum of
three months, consistent with cash conservation
measures the Company was taking in response to the
Coronavirus pandemic. The non-executives receive no
payment or benefits other than their fees, although Mrs
Nabavi was the beneficiary of consultancy fees in
2020, as described below.
Maintel Holdings Plc Annual Report & Accounts 2020Corporate governance 46
Report of the Remuneration committee
continued
Details of directors’ remuneration in 2020
The remuneration of the directors in office during the year was as follows:
Non-executive directors
J D S Booth
A J McCaffery[2]
A P Nabavi[4]
N J Taylor
Executive directors
I MacRae
S Legg[6]
K Stevens[7]
M Townsend[5]
D Davies[3]
Salaries/
fees
Benefits
Bonus/
commissions
Pension
contributions
Total
2020[1]
Total
2019[1]
46
28
30
30
212
79
75
139
52
691
–
–
–
–
1
5
5
37
2
50
–
–
–
–
30
45
–
15
20
110
1
1
–
1
7
3
2
9
2
26
47
29
30
31
250
132
82
200
76
877
49
62
36
37
72
312
180
251
–
1,573
[1]
Excluding social security costs in respect of the above amounting to £106,000 (2019: £144,000).
[2] Angus McCaffery resigned as a non-executive director on 11 December 2020.
[3] Dan Davies was appointed as an executive director on 11 September 2020. This represents his remuneration from this date.
[4]
In addition to her fees as a director stated above, the Company paid £6,856 (2019: £Nil) to a company of which Mrs Nabavi is a shareholder and
director for consultancy services provided to the Company in respect of the bank refinancing.
[5] Mark Townsend was awarded 15,000 ordinary shares in 2020, resulting in a gain of £25,545 which is included in his benefits.
[6]
[7]
Stuart Legg resigned as a director on 30 June 2020. This represents his remuneration up to this date. In addition to a salary of £79,000, Stuart also received
a payment of £50,000 by way of compensation for the termination of his employment.
Kevin Stevens resigned as a director on 30 June 2020. This represents his remuneration up to this date. In addition to a salary of £75,000, Kevin also
received a payment of £24,000 by way of compensation for the termination of his employment.
Share scheme interests awarded in 2020 and 2021
The following awards were made under the Maintel 2015 Long Term Incentive Plan.
Number of
options
over
shares
Directors
Award
date
Option
price
Directors
Number of
options
over
shares
Award
date
Option
price
Ioan MacRae
5,000
18/02/20
£2.63
Ioan MacRae
75,000
3/02/2021
Mark Townsend
5,000
18/02/20
£2.63
Mark Townsend
25,000
3/02/2021
£3.75
£3.75
Stuart Legg
5,000
18/02/20
Kevin Stevens
5,000
18/02/20
Dan Davies
Dan Davies
10,000
17/01/20
50,000
17/09/20
£2.63
£2.63
£2.74
£2.21
The awards were made as market value priced
options and the exercise price was determined by
reference to the previous dealing day’s closing middle
market price. The awards are not subject to the
achievement of performance conditions. The awards
are subject to vesting periods of three years starting
from the award dates.
Maintel Holdings Plc Annual Report & Accounts 2020Corporate governance 47
Statement of Directors’ Shareholding and Share Interests at 31 December 2020
Beneficially
owned shares
With
performance
conditions[2]
Without
performance
conditions
Vested and
unexercised
Exercised
during
the year
Options
Executive Directors
Ioan MacRae
Mark Townsend
Dan Davies
Non-Executive Directors
John Booth[2]
Annette Nabavi
Nicholas Taylor
39,552
1,395
3,420,000
198
17,257
10,000[1]
105,000
20,000
75,000
3,409
[1]
Full vesting of the above nominal cost options for the respective recipient is conditional as follows:
Mark Townsend was awarded nominal cost options over 10,000 shares in April 2018, full vesting of which is subject to two performance conditions being
satisfied: (a) a minimum EPS growth in the period before the option vests, and (b) a minimum increase in the Company’s share price between the three
months preceding grant and the three months preceding vesting. None of the conditions for this award will have been met on the vesting date and so
this award will lapse.
[2]
John Booth also holds 4,000 non-beneficial shares which are held in a charitable foundation of which he is a trustee.
The report of the Remuneration committee was approved by the Board on 1 June 2021.
Annette P Nabavi
Chair of the Remuneration committee
Maintel Holdings Plc Annual Report & Accounts 2020Corporate governance
48
Report of the directors
The directors present their annual report together with
the audited financial statements for the year ended
31 December 2020.
Strategic report
The Maintel overview, Chairman’s statement and
Business review on pages 4-28 comprise the Strategic
report, which is incorporated in the Directors’ report by
reference. The Business review also contains an
indication of likely future developments for the
business.
Results and dividends
The consolidated statement of comprehensive income
is set out on page 60 and shows the profit/(loss) of the
Group for the year.
The Company did not pay any dividend during the
year (2019: £5.0m).
Directors
The directors of the Company during the year and their
interests in the ordinary shares of the Company at
31 December 2020 can be found on page 47. John
Booth has acquired 80,000 shares since the year end.
There have been no other changes in the directors’
shareholdings.
Substantial shareholders
In addition to the directors’ shareholdings, at 1 June 2021 the Company had been notified of the following
shareholdings of 3% or more in the ordinary share capital of the Company:
J A Spens
A J McCaffrey
Chelverton Asset Management
Herald Investment Trust Plc[1]
Elitetele.Com Plc
M R Riley
Hargreaves Lansdown
Barclays Wealth
Number of
1p ordinary shares
% of issued
ordinary shares
2,418,661
1,718,932
1,125,000
804,217
718,614
468,900
461,679
442,703
16.84
11.97
7.83
5.60
5.00
4.52
3.21
3.09
[1] John Booth is a shareholder in Herald Investment Trust Plc, which has notified the Company of an interest in 804,217 1p ordinary shares; this is in addition to
Mr Booth’s beneficial holding on page 49.
Maintel Holdings Plc Annual Report & Accounts 2020Corporate governance 49
Share capital
Details of the share capital of the Company are shown
in note 25 of the financial statements.
39,433 shares were issued in the year (2019: 125,000). No
shares were repurchased during the year (2020: Nil).
The existing authority for the repurchase of the
Company’s shares is for the purchase of up to
2,146,877 shares. A fresh authority, for the purchase of
up to 2,152,788 shares, will be sought at the
forthcoming annual general meeting.
Employees
Maintel’s success is dependent on the knowledge,
experience and engagement of its employees. Its
ability to attract and retain those people is key and
therefore the Group is committed to providing a
competitive total employment package that includes
both financial and non-financial rewards, to align
employee interests with those of the Group.
The Group’s Learning and Development function
reflects the Group’s ongoing commitment to its
employees’ careers and to developing high
performing teams to support long-term success. This
programme of work has included a clear focus on
leadership development to underpin talent
management and succession planning across the
Group as well as technical skills development, to
ensure the Group’s capabilities remain appropriate for
the developing environment. During 2020, the Learning
and Development function additionally took the lead
on supporting the transition towards remote working –
providing practical assistance for both professional
and personal challenges met by employees during the
lockdown periods. The team developed a programme
titled “Stay safe – stay connected” to promote the
physical and mental wellbeing of all employees and
their families.
Full and fair consideration is given to applications for
employment from disabled persons, having regard to
their aptitudes and abilities and to their training and
career development. This includes, where applicable
and possible, the retraining and retention of staff who
become disabled during their employment.
The approach to communication with employees is
reviewed on a regular basis to ensure relevance of
both delivery methods and content of information. This
currently includes channels such as face to face
updates from the Executive Management Team and
regular news updates emailed to all employees, as
well as regular team and individual meetings with
employees. During the COVID-19 pandemic, particular
care has been taken to ensure these communications
have continued using virtual platforms with regular live
and pre-recorded updates from the Executive team,
with opportunity for question and answer both live and
off-line.
Two-way communication is key to the success of the
Group and an employee forum developed in previous
years is now a well-established mechanism to achieve
this, accompanied by an annual employee survey,
with action taken on the results where practicable.
The Company established a Share Incentive Plan in
2006, allowing employees and executive directors to
invest tax effectively in its shares, and so aligning
employee interests with those of 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.
Environment
The Group acknowledges that its responsibilities for
environmental, social and ethical performance
matters - or sustainability – is an essential factor for
smart business today. We work to improve our
transparency and sustainability practices and adopt
environmentally sound policies in our working
practices, such as analysis of energy consumption,
recycling paper and packaging waste, using specialist
recyclers for the provision of Waste from Electrical and
Electronic Equipment (WEEE) services for
telecommunications and IT equipment, and measuring
our Greenhouse Gas Emissions. Sustainability objectives
are set each year and regularly reviewed.
Maintel Holdings Plc Annual Report & Accounts 2020Corporate governance 50
Report of the directors continued
While travelling and office use has been much
reduced due to the COVID-19 pandemic in 2020 we
have saved an estimated equivalent of 89.65 trees
through recycling in the year to 31 December 2020.
Maintel’s sustainability is externally audited through
ISO14001:2015-Environmental and EcoVadis
Sustainability certifications. The review of energy
consumption was carried out by an external
consultancy, Syntegra Consulting ltd. Methodology
used to estimate the quantities of emissions is in
accordance with the Environmental Reporting
Guidelines,: GHG Reporting protocol – Corporate
Standard, including Streamlined Energy and Carbon
Reporting Guidance March 2019 (SECR).
In accordance with SECR a full review of energy
consumption across our offices and operations has
been undertaken for the 12 months to March 2020. The
table below identifies the baseline reference
measurement across all Maintel offices for Electricity,
Gas and Transport within Scope 1 (Direct Green House
Gas Emissions from activities owned or controlled by
Maintel) and Scope 2 (Indirect Emissions).
Total Energy Consumption
Energy (kWh)
Carbon
Emissions
(Tonnes CO2)
Total Annual Electricity
591,136.79
137.82
Total Annual Gas
12,205.00
2.24
Total Transport
Consumption
2,612,330.17
630.09
Total Consumption
3,215,671.96
770.15
This reflects an intensity ratio of 1.31 tonnes CO2 per
employee (based on a Full Time Employee mean of
587.9)
The key focus has been to reduce the electricity
consumption across all offices with initiatives such as
the provision of sensor-operated lighting being
implemented where they are not yet in place. The
initial target had been for an 8% reduction for the
reporting period from April 2020 to March 2021.
However, the changes in operations brought about by
the pandemic has caused a more significant drop in
emissions, and the Company will be introducing a new
target in conjunction with developing its revised
working model regarding the use of office locations
and home and remote working. The Company also
plans to introduce Scope 3 (Other Indirect Emissions)
reporting through improved supplier management,
among other initiatives.
Going concern
The Group has a sound financial record including strong
operating cash flows derived from a substantial level of
recurring revenue across a range of sectors. Post year
end an amendment and extension to the current bank
facilities with the National Westminster Bank (“NWB”)
was signed on 14 May 2021 (see note 31), extending
the facility for 12 months to October 2022 on improved
terms. The key covenants that will prevail over this
period include net leverage ratio and interest
cover tests.
In addition, the Group’s balance sheet was further
strengthened by the disposal of our Managed Print
Services business unit on 30 April 2021 for a
consideration of £4.5m, proceeds from which has
been used to reduce the Group’s debt position further.
As highlighted in the risk management section
(see pages 22-23) the Board has put robust business
continuity plans in place to ensure continuity of trading
and operations. In addition, to address the trading
impact of COVID-19 during 2020, the directors have
already taken significant steps to preserve working
capital and maintain a satisfactory liquidity position
(see page 24, COVID-19 section).
The Group’s forecasts and projection models, taking
into account uncertainty around the medium-term
impact of the pandemic with regard to both project
delivery and timing of pipeline conversion, means that
actual performance could fall short of management
forecasts in terms of revenue expectations. The Board
has reviewed the model in detail, taking account of
reasonably possible changes in trading performance,
including revenues falling below a COVID-19 affected
FY 20 by 3%, and further mitigating actions it could
take such as further overhead savings and capital
expenditure programme postponement. As a result,
the Board believes that the Group has sufficient
Maintel Holdings Plc Annual Report & Accounts 2020Corporate governance 51
headroom in its agreed funding arrangements to
withstand a greater negative impact on its cash flow
than it currently expects.
On this basis , whilst it is acknowledged that there is
continued uncertainty surrounding the future impacts
of COVID-19, 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.
Financial instruments
Annual General Meeting
The Annual General Meeting of the Company will be
held at its Blackfriars Road offices on 30 June at
10.00 am.
Auditors
All 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.
Details of the use of financial instruments by the Group
are contained in note 24 of the financial statements.
On behalf of the Board
Ioan MacRae
Director
1 June 2021
Maintel Holdings Plc Annual Report & Accounts 2020Corporate governance 52
Statement of directors’ responsibilities
d.
for the company financial statements state
whether applicable UK accounting standards
have been followed, subject to any material
departures disclosed and explained in the
company financial statements;
e.
prepare the financial statements on the going
concern basis unless it is inappropriate to presume
that the group and the company will continue in
business.
The directors are responsible for keeping adequate
accounting records that are sufficient to show and
explain the group’s and the company’s transactions
and disclose with reasonable accuracy at any time
the financial position of the group and 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 group and the
company and hence for taking reasonable steps for
the prevention and detection of fraud and other
irregularities.
The directors are responsible for the maintenance and
integrity of the corporate and financial information
included on the Maintel Holdings plc website.
Legislation in the United Kingdom governing the
preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
Directors’ responsibilities
The directors are responsible for preparing the
Strategic Report, the Directors’ Report and the
financial statements in accordance with applicable
law and regulations.
Company law requires the directors to prepare group
and company financial statements for each financial
year. The directors have elected under company law
to prepare group financial statements in accordance
with international accounting standards in conformity
with the requirements of the Companies Act 2006 and
have elected under company law to prepare the
company financial statements in accordance with
United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards and
applicable law).
The group financial statements are required by law
and international accounting standards in conformity
with the requirements of the Companies Act 2006 to
present fairly the financial position and performance of
the group. The Companies Act 2006 provides in
relation to such financial statements that references in
the relevant part of that Act to financial statements
giving a true and fair view are references to their
achieving a fair presentation.
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 the company and of the profit or loss of
the group for that period.
In preparing each of the group and company
financial statements, the directors are required to:
a.
select suitable accounting policies and then apply
them consistently;
b.
make judgements and accounting estimates that
are reasonable and prudent;
c.
for the group financial statements, state whether
they have been prepared in accordance with
international accounting standards in conformity
with the requirements of the Companies Act 2006;
Maintel Holdings Plc Annual Report & Accounts 2020Corporate governance Financial Statements
5353
5353
54
Independent Auditor’s Report
to the members of Maintel Holdings Plc
Opinion
We have audited the financial statements of Maintel Holdings
Plc (the ‘parent company’) and its subsidiaries (the ‘group’)
for the year ended 31 December 2020 which comprise the
consolidated statement of comprehensive income, the
consolidated statement of financial position, the consolidated
statement of changes in equity, the consolidated statement
of cash flows, the company balance sheet, the company
statement of changes in equity and notes to the financial
statements, including a summary of significant accounting
policies. The financial reporting framework that has been
applied in the preparation of the group financial statements
is applicable law and International Accounting Standards in
conformity with the requirements of the Companies Act 2006.
The financial reporting framework that has been applied in
the preparation of the parent company financial statements
is applicable law and United Kingdom Accounting Standards,
including Financial Reporting Standard 101 “Reduced
Disclosure Framework” (United Kingdom Generally Accepted
Accounting Practice).
In our opinion:
• the financial statements give a true and fair view of the state
of the group’s and of the parent company’s affairs as at
31 December 2020 and of the group’s loss for the year then
ended;
• the group financial statements have been properly
prepared in accordance with International Accounting
Standards in conformity with the requirements of the
Companies Act 2006;
• the parent company 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.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law.
Our responsibilities under those standards are further described
in the Auditor’s responsibilities for the audit of the financial
statements section of our report. We are independent of
the group and the parent company in accordance with
the ethical requirements that are relevant to our audit of the
financial statements in the UK, including the FRC’s Ethical
Standard as applied to SME listed entities and we have fulfilled
our other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for
our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that
the directors’ use of the going concern basis of accounting
in the preparation of the financial statements is appropriate.
Our evaluation of the directors’ assessment of the group’s
and parent company’s ability to continue to adopt the
going concern basis of accounting included reviewing and
evaluating management’s three-year cash flow forecasts
and the results of scenario analysis. Disclosure of the group’s
going concern assessment is disclosed in the Accounting
policies and based on the results of the audit procedures
outlined above, we have no observations to report.
Based on the work we have performed, we have not
identified any material uncertainties relating to events
or conditions that, individually or collectively, may cast
significant doubt on the group’s or the parent company’s
ability to continue as a going concern for a period of at
least twelve months from when the financial statements are
authorised for issue.
Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the relevant
sections of this report.
Summary of our audit approach
Key audit matters
Group
• Revenue recognition
• Valuation of intangibles
• Going concern
Parent Company
• Going concern
Materiality
Group
• Overall materiality: £476,000
(2019: £450,000)
• Performance materiality:
£357,000 (2019: £337,500)
Parent Company
• Overall materiality: £238,000
(2019: £432,000)
• Performance materiality:
£178,000 (2019: £323,000)
Our audit procedures covered
100% of revenue, total assets
and loss before tax.
Scope
Maintel Holdings Plc Annual Report & Accounts 2020Financial statements
55
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the group financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to
fraud) we identified, including those which had the greatest effect on the overall audit strategy, the allocation of resources in the
audit and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the group
financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Revenue recognition
Key audit matter description
The Group has a number of revenue streams. Details of the accounting policies applied
during the period are given in note 2 (e).
Management make judgements in relation to revenue recognition for Managed Services
and Technology sales under IFRS 15. These include determining Maintel’s performance
obligations in its contracts with customers and whether as at the reporting date, the group
has completed its performance obligations.
We consider there to be a significant risk around the completeness and existence of supply
and installation services. We also consider there to be a risk of misstatement of the financial
statements related to transactions occurring close to the year end, as transactions could be
recorded in the wrong financial period (cut-off).
How the matter was addressed in
the audit
In order to address of the risks associated with these revenue streams we tested a sample of
contracts to assess whether:
• revenue had been recognised in accordance with the Group’s accounting policy and
IFRS 15 requirements;
• revenue was recognised appropriately based on whether Maintel had completed its
performance obligations under the contract prior to the reporting date by reference
to its obligations stated in the customer contracts, correspondence with customers on
supply and installation works and discussions with project managers.; and
• any other terms within the contract had any material accounting or disclosure
implications.
We also applied data analytics techniques and tested the reconciliation between the
group’s revenue recording systems to test the assertions over revenue.
The Group has completed a number of past acquisitions. The recoverability of the goodwill
and intangibles assets arising on acquisitions is dependent on individual cash-generating
units to which the goodwill and intangible assets are allocated generating sufficient cash
flows in the future. Due to the inherent uncertainty involved in forecasting future cash flows
and selection of an appropriate discount rate, which are the basis of the assessment of
recoverability, this is considered a key audit matter.
Refer to note 14 to the financial statements for the disclosures relating to the goodwill and the
related impairment calculations.
Valuation of intangibles
Key audit matter description
Maintel Holdings Plc Annual Report & Accounts 2020 Financial statements 56
Independent Auditor’s Report
to the members of Maintel Holdings Plc continued
How the matter was addressed in
the audit
Going concern
Key audit matter description
How the matter was addressed in
the audit
Our audit procedures included reviewing the discounted cash flow models, testing and
challenging the judgements and assumptions used by management in their assessment of
whether goodwill is impaired and assessing management’s sensitivity analysis on the cash flow
model.
We have challenged the assumptions and inputs in determining the discount rate used to
calculate the present value of projected future cash flows and have tested the mathematical
accuracy and integrity of the model used.
We assessed management’s earnings assumptions in the models compared to current year
performance and forecasted performance for the next financial year. We have reviewed
management’s sensitivity analysis of key assumptions, including the revenue growth forecasts
and the discount rate.
We have further considered whether the disclosures about the sensitivity of the outcome of the
impairment assessment to changes in key assumptions were adequate and properly reflected
the risks inherent in the valuation of the cash generating units.
It is the responsibility of the directors to form an opinion on whether the going concern basis
of accounting is appropriate and to identify and disclose any material uncertainties that may
cast significant doubt on the group’s or parent company’s ability to continue as a going
concern.
When planning our current year audit the company was in negotiations to enter into a new or
extended bank facility arrangement and therefore we identified a significant risk associated
with the need to ensure a new or extend facility was agreed prior to approval of the financial
statements and that this facility would be sufficient to cover the group’s operational cash
requirements for the foreseeable future.
The directors have set out their assessment in relation to going concern in the summary of
significant accounting policies in note 2.
Our audit work included, but was not restricted to:
• Obtaining a copy of the extended banking facilities and reviewing the key terms,
including covenants.
• Obtaining and reviewing the cash flow forecasts prepared by management for the
period to 31 December 2022.
• Checking the mathematical accuracy of the cash flow forecasts.
• Reviewing the cashflow forecasts in light of our understanding of the business to identify
and challenge the key assumptions therein, to assess the level of cash headroom, to
stress test the forecasts and therefore to assess the risk of covenant breach.
• Considering the impact of management’s sensitivities on the forecast cash flows and
covenant compliance (including downside scenarios relating to revenue and EBITDA).
• Review of the disclosures within the financial statements to assess whether they
accurately reflect management’s assessment of going concern, including any
uncertainties.
Maintel Holdings Plc Annual Report & Accounts 2020Financial statements 57
Our application of materiality
When establishing our overall audit strategy, we set certain thresholds which help us to determine the nature, timing and extent of
our audit procedures. When evaluating whether the effects of misstatements, both individually and on the financial statements as
a whole, could reasonably influence the economic decisions of the users we take into account the qualitative nature and the size
of the misstatements. Based on our professional judgement, we determined materiality as follows:
Overall materiality
£476,000 (2019: £450,000)
£238,000 (2019: £432,000)
Group
Parent company
Basis for determining overall
materiality
Rationale for benchmark applied
5% of EBITDA
0.5% of Net assets
Profit measure used for the trading activities
of the Group.
Parent company is a holding company so net
assets used as the benchmark.
Performance materiality
£357,000 (2019: £337,500)
£178,000 (2019: £323,000)
Basis for determining performance
materiality
Reporting of misstatements to the
Audit Committee
75% of overall materiality
75% of overall materiality
Misstatements in excess of £24,000 and
misstatements below that threshold that, in
our view, warranted reporting on qualitative
grounds.
Misstatements in excess of £12,000 and
misstatements below that threshold that, in
our view, warranted reporting on qualitative
grounds.
An overview of the scope of our audit
The group consists of 3 components, all of which are based in
the UK and Republic of Ireland.
Full scope audits were performed for all 3 components.
Other information
The directors are responsible for the other information. The
other information comprises the information included in
the annual report, other than the financial statements and
our auditor’s report thereon. Our opinion on the financial
statements does not cover the other information and, except
to the extent otherwise explicitly stated in our report, we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing
so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge
obtained in the audit or otherwise appears to be materially
misstated. If we identify such material inconsistencies or
apparent material misstatements, we are required to
determine whether there is a material misstatement in the
financial statements or a material misstatement of the other
information. If, based on the work we have performed, we
conclude that there is a material misstatement of this other
information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the
Companies Act 2006
In our opinion, based on the work undertaken in the course of
the audit:
• the information given in the Strategic Report and the Directors’
Report for the financial year for which the financial statements
are prepared is consistent with the financial statements; and
• the Strategic Report and the Directors’ Report have been
prepared in accordance with applicable legal requirements.
Matters on which we are required to report by
exception
In the light of the knowledge and understanding of the group
and the parent company and their environment obtained
in the course of the audit, we have not identified material
misstatements in the Strategic Report or the Directors’ Report.
We have nothing to report in respect of the following matters in
relation to which 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
Maintel Holdings Plc Annual Report & Accounts 2020 Financial statements 58
Independent Auditor’s Report
to the members of Maintel Holdings Plc continued
In relation to fraud, the objectives of our audit are to
identify and assess the risk of material misstatement of
the financial statements due to fraud, to obtain sufficient
appropriate audit evidence regarding the assessed risks
of material misstatement due to fraud through designing
and implementing appropriate responses and to respond
appropriately to fraud or suspected fraud identified during
the audit.
However, it is the primary responsibility of management, with
the oversight of those charged with governance, to ensure
that the entity’s operations are conducted in accordance
with the provisions of laws and regulations and for the
prevention and detection of fraud.
In identifying and assessing risks of material misstatement
in respect of irregularities, including fraud, the group audit
engagement team:
• obtained an understanding of the nature of the industry
and sector, including the legal and regulatory frameworks
that the group and parent company operate in and how
the group and parent company are complying with the
legal and regulatory frameworks;
• inquired of management, and those charged with
governance, about their own identification and assessment
of the risks of irregularities, including any known actual,
suspected or alleged instances of fraud;
• discussed matters about non-compliance with laws
and regulations and how fraud might occur including
assessment of how and where the financial statements
may be susceptible to fraud.
• 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.
Responsibilities of directors
As explained more fully in the directors’ responsibilities
statement set out on page 52, the directors are responsible
for the preparation of the financial statements and for being
satisfied that they give a true and fair view, and for such
internal control as the directors determine is necessary to
enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the group’s and the parent
company’s ability to continue as a going concern, disclosing,
as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either
intend to liquidate the group or the parent company or to
cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the
financial statements
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not
a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when
it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial
statements.
The extent to which the audit was considered capable
of detecting irregularities, including fraud
Irregularities are instances of non-compliance with laws
and regulations. The objectives of our audit are to obtain
sufficient appropriate audit evidence regarding compliance
with laws and regulations that have a direct effect on the
determination of material amounts and disclosures in the
financial statements, to perform audit procedures to help
identify instances of non-compliance with other laws and
regulations that may have a material effect on the financial
statements, and to respond appropriately to identified
or suspected non-compliance with laws and regulations
identified during the audit.
Maintel Holdings Plc Annual Report & Accounts 2020Financial statements 59
The most significant laws and regulations were determined as follows:
Legislation / Regulation
International Accounting Standards in
conformity with the Companies Act,
FRS 101 and Companies Act 2006
Additional audit procedures performed by the Group audit engagement team
included:
Review of the financial statement disclosures and testing to supporting
documentation;
Completion of disclosure checklists to identify areas of non-compliance
Tax compliance regulations
Inspection of advice received from internal / external tax advisors
Involvement of a tax specialist in the audit of tax
Consideration of whether any matter identified during the audit required reporting to
an appropriate authority outside the entity
The areas that we identified as being susceptible to material misstatement due to fraud were:
Risk
Revenue recognition
Audit procedures performed by the audit engagement team:
The audit procedures performed in relation to revenue recognition are documented
in the key audit matter section of our audit report and included consideration
of whether the company had completed its performance obligations under the
contract prior to the reporting date for revenue recognised in the year.
Management override of controls
Testing the appropriateness of journal entries and other adjustments;
Assessing whether the judgements made in making accounting estimates are
indicative of a potential bias; and
Evaluating the business rationale of any significant transactions that are unusual or
outside the normal course of business.
A further description of our responsibilities for the audit
of the financial statements is located on the Financial
Reporting Council’s website at: http://www.frc.org.uk/
auditorsresponsibilities. This description forms part of our
auditor’s report.
Use of our report
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.
David Clark (Senior Statutory Auditor)
For and on behalf of RSM UK Audit LLP, Statutory Auditor
Chartered Accountants
25 Farringdon Street
London EC4A 4AB
Date: 1 June 2021
Maintel Holdings Plc Annual Report & Accounts 2020 Financial statements 60
Consolidated statement of comprehensive income
for the year ended 31 December 2020
Revenue
Cost of sales
Gross profit
Other operating income
Administrative expenses
Intangibles amortisation
Exceptional items
Share based remuneration
Other administrative expenses
Operating (loss) / profit
Financial expense
(Loss) / profit before taxation
Taxation credit
(Loss) / profit for the year
Other comprehensive income / (expense) for the year
Exchange differences on translation of foreign operations
Total comprehensive (loss) / income for the year
(Loss) / earnings per share (pence)
Basic
Diluted
The notes on pages 65 to 90 form part of these consolidated financial statements
Note
4
7
14
13
7
8
9
11
11
2020
£000
106,430
(75,546)
30,884
611
(6,286)
(2,482)
259
(23,879)
(32,388)
(893)
(1,339)
(2,232)
498
(1,734)
6
(1,728)
(12.1)
(12.1)
2019
£000
122,932
(87,682)
35,250
1,035
(6,674)
(385)
274
(26,407)
(33,192)
3,093
(1,329)
1,764
1,434
3,198
(3)
3,195
22.4p
22.2p
Maintel Holdings Plc Annual Report & Accounts 2020Financial statements Consolidated statement of financial position
at 31 December 2020
61
Non current assets
Intangible assets
Right of use assets
Property, plant and equipment
Trade and other receivables
Current assets
Inventories
Trade and other receivables
Income tax
Total current assets
Total assets
Current liabilities
Trade and other payables
Lease liabilities
Borrowings
Total current liabilities
Non-current liabilities
Other payables
Lease liabilities
Deferred tax
Borrowings
Total non-current liabilities
Total liabilities
Total net assets
Equity
Issued share capital
Share premium
Other reserves
Retained earnings
Total equity
31 December
2020
£000
31 December
2020
£000
31 December
2019
£000
31 December
2019
£000
Note
1,865
22,758
261
41,650
1,092
22,267
65,009
2,231
2,873
1,816
-
14
17
16
19
18
19
20
23
22
20
23
21
22
25
26
26
26
59,613
3,808
1,415
1,050
65,886
24,884
90,770
6,920
71,929
18,841
144
24,588
73
(5,964)
18,841
3,243
26,921
177
43,564
987
3,696
48,247
2,898
3,367
2,537
21,883
63,817
4,087
1,514
-
69,418
30,341
99,759
30,685
78,932
20,827
143
24,588
67
(3,971)
20,827
The consolidated financial statements were approved and authorised for issue by the Board on 1 June 2021 and were signed on its
behalf by:
Mark Townsend
Director
The notes on pages 65 to 90 form part of these consolidated financial statements
Maintel Holdings Plc Annual Report & Accounts 2020 Financial statements 62
Consolidated statement of changes in equity
for the year ended 31 December 2020
Balance at 1 January 2019
Profit for the year
Other comprehensive income:
Foreign currency translation differences
Total comprehensive income
for the year
Transactions with owners in their
capacity as owners:
Dividends paid
Issue of new ordinary shares
Share based remuneration
At 31 December 2019
Loss for the year
Other comprehensive income:
Foreign currency translation differences
Total comprehensive expense
for the year
Transactions with owners in their
capacity as owners:
Issue of new ordinary shares
Share based remuneration
At 31 December 2020
Note
Share
capital
£000
Share
premium
£000
142
24,354
10
1
-
-
-
-
1
-
-
-
-
-
234
-
143
24,588
-
-
-
1
-
-
-
-
-
-
Other
reserves
£000
70
-
(3)
(3)
-
-
-
67
-
6
6
-
-
144
24,588
73
Retained
earnings
£000
(1,942)
3,198
Total
£000
22,624
3,198
-
(3)
3,198
3,195
(4,953)
(4,953)
(274)
(3,971)
(1,734)
235
(274)
20,827
(1,734)
-
6
(1,734)
(1,728)
-
(259)
(5,964)
1
(259)
18,841
The notes on pages 65 to 90 form part of these consolidated financial statements
Maintel Holdings Plc Annual Report & Accounts 2020Financial statements Consolidated statement of cash flows
for the year ended 31 December 2020
Operating activities
(Loss) / profit before taxation
Adjustments for:
Intangibles amortisation
Share based payment credit
Loss on sale of property, plant and equipment
Exceptional non-cash items
Depreciation of plant and equipment
Depreciation of right of use asset
Interest payable
Operating cash flows before changes in working capital
Decrease in inventories
Decrease in trade and other receivables
Decrease in trade and other payables
Cash generated from operating activities
Tax paid
Net cash inflows from operating activities
Investing activities
Purchase of plant and equipment
Purchase of intangible assets
Purchase price in respect of a business combination in a prior year
Net cash outflows from investing activities
63
2020
£000
2019
£000
(2,232)
1,764
6,286
(259)
2
325
665
1,241
1,339
7,367
1,377
3,113
(2,284)
9,573
(158)
9,415
(568)
(2,082)
(1,096)
(3,746)
6,674
(274)
99
(407)
695
1,267
1,329
11,147
5,025
7,237
(13,668)
9,741
(328)
9,413
(759)
(1,143)
(679)
(2,581)
Maintel Holdings Plc Annual Report & Accounts 2020 Financial statements 64
Consolidated statement of cash flows
for the year ended 31 December 2020 continued
Financing activities
Proceeds from borrowings
Repayment of borrowings
Lease liability repayments
Issue of ordinary shares
Interest paid
Issue costs of debt
Equity dividends paid
Net cash outflows from financing activities
Net (decrease) / increase in cash and cash equivalents
Bank overdrafts / Cash and cash equivalents at start of year
Exchange differences
Bank overdrafts at end of year
2020
£000
4,500
(8,000)
(1,174)
-
(1,105)
(53)
-
(5,832)
(163)
(3,696)
14
(3,845)
2019
£000
500
-
(1,200)
235
(1,102)
-
(4,953)
(6,520)
312
(3,988)
(20)
(3,696)
The following cash and non-cash movements have occurred during the year in relation to financing activities from non-current liabilities
Reconciliation of liabilities from financing activities
Loans and borrowings (Note 22)
At 1 January
Cash Flows
Non-cash movements (Amortised debt issue costs)
At 31 December
Lease liabilities (Note 23)
At 1 January
Non-cash movements
Cash flows
At 31 December
Current
Non-current
The notes on pages 65 to 90 form part of these consolidated financial statements
2020
£000
25,579
(3,404)
92
22,267
2020
£000
4,354
785
(1,174)
3,965
1,092
2,873
2019
£000
25,283
208
88
25,579
2019
£000
5,320
234
(1,200)
4,354
987
3,367
Maintel Holdings Plc Annual Report & Accounts 2020Financial statements Notes forming part of the consolidated financial statements
for the year ended 31 December 2020
65
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 160 Blackfriars Road,
London SE1 8EZ.
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 Accounting Standards in
conformity with the requirements of the Companies Act.
(b) Basis of consolidation
The consolidated financial statements present the results of the
Company and its subsidiaries (“the Group”) as if they formed
a single entity. Intercompany transactions and balances
between Group companies are therefore eliminated in full.
Where the Company has control over an investee, it is
classified as a subsidiary. The Company controls an investee
if all three of the following elements are present: power over
the investee, exposure to variable returns from the investee,
and the ability of the investor to use its power to affect those
variable returns. Control is reassessed whenever facts and
circumstances indicate that there may be a change in any of
these elements of control.
The consolidated financial statements incorporate the results
of business combinations using the acquisition method. In the
consolidated statement of financial position, the acquiree’s
identifiable assets, liabilities and contingent liabilities are initially
recognised at their fair values at the acquisition date. The
acquisition related costs are included in the consolidated
statement of comprehensive income on an accruals basis. The
results of acquired operations are included in the consolidated
statement of comprehensive income from the date on which
control is obtained.
(c) Rounding of amounts
All amounts disclosed in the financial statements and notes
have been rounded to the nearest thousand unless otherwise
stated.
(d) Going concern
The Group has a sound financial record including strong
operating cash flows derived from a substantial level of
recurring revenue across a range of sectors. Post year end an
amendment and extension to the current bank facilities with
the National Westminster Bank (“NWB”) was signed on 14 May
2021 (see note 31), extending the facility for 12 months to
October 2022 on improved terms. The key covenants that will
prevail over this period include net leverage ratio and interest
cover tests.
In addition, the Group’s balance sheet was further
strengthened by the disposal of our Managed Print Services
business unit on 30 April 2021 for a consideration of £4.5m,
proceeds from which has been used to reduce the Group’s
debt position further.
As highlighted in the risk management section (see pages 22‑23)
the Board has put robust business continuity plans in place
to ensure continuity of trading and operations. In addition,
to address the trading impact of COVID‑19 during FY 20 the
directors have already taken significant steps to preserve
working capital and maintain a satisfactory liquidity position
(see page 24, COVID‑19 section).
The Group’s forecasts and projection models, taking into
account uncertainty around the medium‑term impact of the
pandemic with regard to both project delivery and timing
of pipeline conversion, means that actual performance
could fall short of management forecasts in terms of revenue
expectations. The Board has reviewed the model in detail
taking account of reasonably possible changes in trading
performance, including revenues falling below a COVID
affected FY 20 by 3%, and further mitigating actions it could
take such as further overhead savings and capital expenditure
programme postponement. As a result, the Board believes
that the Group has sufficient headroom in its agreed funding
arrangements to withstand a greater negative impact on its
cash flow than it currently expects.
On this basis, whilst it is acknowledged that there is continued
uncertainty surrounding the future impacts of COVID‑19, 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.
(e) 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.
Maintel Holdings Plc Annual Report & Accounts 2020 Financial statements 66
Managed services and technology
Managed services revenues are recognised over time, over
the relevant contract term, on the basis that the customer
simultaneously receives and consumes the benefits provided
by the Group’s performance of the services over the contract
term. Where the Group’s performance of its obligations under
a contract exceeds amounts received, accrued income or
a trade receivable is recognised depending on the Group’s
billing rights. Where the Group’s performance of its obligations
under a contract is less than amounts received, deferred
income is recognised.
Technology revenues for contracts with customers, which
include both supply of technology goods and installation
services, represent in substance one performance obligation
and result in revenue recognition at a point in time, when
the Group has fulfilled its performance obligations under the
relevant customer contract. Under these contracts, the Group
performs a significant integration service which results in the
technology goods and the integration service being one
performance obligation. Over the course of the contract,
the technology goods, which comprise both hardware and
software components are customised through the integration
services to such an extent that the final customised technology
goods installed on completion are substantially different
to their form prior to the integration service. Revenue is
recognised when the integrated technology equipment and
software has been installed and accepted by the customer.
Network services
Revenues for network services are comprised of call traffic,
line rentals and data services, which are recognised over time,
for services provided up to the reporting date, on the basis
that the customer simultaneously receives and consumes the
benefits provided by the Group’s performance of the services
over the contract term. Amounts received in advance of the
performance of the call traffic, line rentals and data services
are recognised as performance obligations and released
to revenue as the Group performs the services under the
contract. Where the Group’s performance of its obligations
under a contract are less than amounts received, deferred
income is recognised.
Mobile
Connection commission received from the mobile network
operators on fixed line revenues, are allocated primarily to two
separate performance obligations, being (i) the obligation to
provide a hardware fund to end users for the supply of handsets
and other hardware kit ‑ revenues are recognised under these
contracts at a point in time when the hardware goods are
delivered to the customer and the customer has control of the
assets; and (ii) ongoing service obligations to the customer ‑
revenues are spread over the course of the customer contract
term. In the case of (i) revenues are recognised based on the
fair value of the hardware goods provided to the customer
on delivery and for (ii) the residual amounts, representing
connection commissions less the hardware revenues are
recognised as revenues over the customer contract term.
Customer overspend and bonus payments are recognised
monthly at a point in time when the Group’s performance
obligations have been completed; these are also payable by
the network operators on a monthly basis.
(f) Leased assets
The Group applied IFRS 16 via the modified retrospective
approach from 1 January 2019. The policy applies to leased
properties, motor vehicles and certain office and computer
equipment.
When the Group enters into a lease, a lease liability and a right
of use asset is created.
A lease liability shall be recognised at the commencement
date of the lease term and will be measured at the present
value of the remaining lease payments discounted using
the Groups’ incremental borrowing rate. In determining the
lease term, hindsight will be applied in respect of leases which
contain an option to terminate the lease. The lease liability is
subsequently increased for a constant periodic rate of interest
on the remaining balance of the lease liability and reduced for
lease payments. Interest on the lease liability is recognised in
the income statement.
A right of use asset shall be recognised at the commencement
date of the lease term. The right of use asset will be measured
at an amount equal to the lease liability. The right of use asset
will subsequently be measured at cost less accumulated
depreciation and any accumulated impairment losses. The
depreciation policy for leased property, motor vehicles and
office and computer equipment is on a straight-line basis over
the shorter of the lease term and the useful life of the asset.
Where leases are 12 months or less or of low value, payments
made are expensed evenly over the period of the lease.
Rentals receivable under operating leases are credited to
the consolidated statement of comprehensive income on a
straight‑line basis over the term of the lease. The aggregate
cost of lease incentives offered is recognised as a reduction of
the rental income over the lease term on a straight‑line basis.
(g) Employee benefits
The Group contributes to a number of defined contribution
pension schemes in respect of certain of its employees,
including those established under auto‑enrolment legislation.
The amount charged in the consolidated 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.
Maintel Holdings Plc Annual Report & Accounts 2020Financial statementsNotes forming part of the consolidated financial statementsfor the year ended 31 December 2020 continued 67
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.
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:
(h) Exceptional items
• the same taxable Group company; or
Exceptional items are significant items of non-recurring
expenditure that have been separately presented by virtue of
their nature to enable a better understanding of the Group’s
financial performance. Non-recurring exceptional items
are presented separately in the consolidated statement of
comprehensive income.
(i) Interest
• 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.
Interest income and expense is recognised using the effective
interest rate basis.
(k) Dividends
(j) 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 balance sheet 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 and taxable temporary
differences will be available against which the asset can
be utilised.
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 consolidated
financial statements.
(l) 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; the fair value of the consideration comprises
the fair value of assets given. 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.
Customer relationships
Customer relationships are stated at fair value where acquired
through a business combination, less accumulated amortisation.
Customer relationships are amortised over their estimated
useful lives of six years to eight years.
Management judgement is used in determining the amount
of deferred tax asset that can be recognised, based upon the
likely timing and level of future taxable profits together with
future tax planning strategies.
Product platform
The product platform is stated at fair value where acquired
through a business combination less accumulated
amortisation.
The amount of the deferred tax asset or liability is measured
on an undiscounted basis and 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.
The product platform is amortised over its estimated useful life
of eight years.
Maintel Holdings Plc Annual Report & Accounts 2020 Financial statements 68
Brand
Brands are stated at fair value where acquired through a
business combination less accumulated amortisation.
Brands are amortised over their estimated useful lives, being
eight years in respect of the ICON brand.
Software (Microsoft licences and Callmedia)
Software is stated at cost less accumulated amortisation.
Where these assets have been acquired through a business
combination, the cost is the fair value allocated in the
acquisition accounting.
Software is amortised over its estimated useful life of (i) three
years in respect of the Microsoft licences, (ii) five years in
respect of the Callmedia software and capitalised systems
software development costs.
(m) 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 in
the administrative expenses line in the consolidated statement
of comprehensive income and, in respect of goodwill
impairments, the impairment is never reversed.
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.
(n) 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, other than freehold
land, over their expected useful lives, at the following rates:
Office and computer equipment
Motor vehicles
Leasehold improvements
-
-
‑
25% straight line
25% straight line
over the remaining
period of the lease
Property, plant and equipment acquired in a business
combination is initially recognised at its fair value.
(o) 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.
(p) Cash and cash equivalents
Cash and cash equivalents comprise cash balances and short
term deposits with an original maturity of three months or less,
held for meeting short term commitments.
(q) Financial assets and liabilities
The Group’s financial assets and liabilities mainly comprise
cash, borrowings, trade and other receivables, trade and
other payables and lease liabilities.
Trade and other receivables are not interest bearing and are
stated at their amortised cost as reduced by appropriate
allowances for irrecoverable amounts or additional costs
required to effect recovery.
The Group reviews the amount of credit loss associated with
its trade receivables based on forward looking estimates that
take into account current and forecast credit conditions.
The Group has applied the Simplified Approach applying
a provision matrix based on number of days past due to
measure lifetime expected credit losses and after taking into
account customer sectors with different credit risk profiles
and current and forecast trading conditions. Trade and other
payables are not interest bearing and are stated at their
amortised cost.
(r) Borrowings
Interest bearing bank loans and overdrafts are initially
recorded at the value of the amount received, net of
attributable transaction costs. Interest bearing borrowings are
subsequently stated at amortised cost with any difference
between cost and redemption value being recognised in the
consolidated statement of comprehensive income over the
period of the borrowing using the effective interest method.
(s) Foreign currency
The presentation currency of the Group is Sterling. All Group
companies have a functional currency of Sterling (other than
Maintel International Limited (“MIL”) which has a functional
currency of the Euro) consistent with the presentation currency
of the Group’s consolidated financial statements. Transactions
in currencies other than Sterling are recorded at the rates of
exchange prevailing on the dates of the transactions.
Maintel Holdings Plc Annual Report & Accounts 2020Financial statementsNotes forming part of the consolidated financial statementsfor the year ended 31 December 2020 continued 69
Amendments to IAS 1 and IAS 8: Definition of Material
(effective 1 January 2021)
Amendments to IFRS 9, IAS 39 and IFRS 7: Interest Rate
Benchmark Reform (effective 1 January 2021)
The directors do not expect the adoption of these
amendments to standards to have a material impact on the
financial statements.
3. 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 of non-current assets
The Group is required to test, on an annual basis, whether
goodwill has suffered any impairment. The Group is also
required to test other finite life intangible assets for impairment
where impairment indicators are present. The recoverability
of assets subject to impairment reviews is assessed based on
whether the carrying value of assets can be supported by the
net present value of future cash flows derived from such assets,
using cash flow projections which have been discounted at an
appropriate rate. In calculating the net present value of the
future cash flows, certain assumptions are required to be made
in respect of uncertain matters.
In particular, management exercises estimation in determining
assumptions for revenue growth rates and gross margins for
future periods which are important components of future cash
flows, and also in determining the appropriate discount rates
which are used across the Group’s cash generating units (refer
to note 14).
On consolidation, the results of MIL are translated into Sterling
at rates approximating those ruling when the transactions
took place. All assets and liabilities of MIL, including goodwill
arising on its acquisition, are translated at the rate ruling at
the reporting date. Exchange differences on retranslation of
the foreign subsidiary are recognised in other comprehensive
income and accumulated in a translation reserve.
(t) Government grants
Grants from the government are recognised at their fair
value where there is a reasonable assurance that the grant
will be received and the Group will comply with all attached
conditions. Government grants in respect of the furlough of staff
over the period of the COVID‑19 pandemic, are recognised in
the period when the related salary costs are incurred.
(u) Share-based payments
The Group uses the Black Scholes Model to calculate the
appropriate charge for options issued.
Where employees are rewarded using equity settled
share-based payments, the fair values of employees’ services
are determined indirectly by reference to the fair value of the
instrument granted to the employee. This fair value is appraised
at the grant date.
All equity‑settled share‑based payments are ultimately
recognised as an expense in the income statement with a
corresponding credit to reserves.
If vesting periods apply, the expense is allocated over the
vesting periods, based on the best available estimate of
the number of share options expected to vest. Estimates
are revised subsequently if there is any indication that the
number of share options expected to vest differs from previous
estimates. Any cumulative adjustment prior to vesting is
recognised in the current year. No adjustment is made to any
expense recognised in prior years if share options that have
vested are not exercised.
(v) Accounting standards issued
No new accounting standards issued have been adopted in
the year.
(w) Standards in issue but not yet effective
At the date of authorisation of these financial statements there
were amendments to standards which were in issue but which
were not yet effective and which have not been applied. The
principal ones were:
Amendments to References to the Conceptual Framework in
IFRS Standards (effective 1 January 2021)
Amendment to IFRS 3 Business Combinations (effective
1 January 2021, not yet endorsed by EU)
Maintel Holdings Plc Annual Report & Accounts 2020 Financial statements 70
4. Segment information
Year ended 31 December 2020
For management reporting purposes and operationally, the Group consists of three business segments: (i) telecommunications
managed service and technology sales, (ii) telecommunications network services, and (iii) mobile services. Revenue from
managed services, network services and mobile is recognised over time and technology revenue is recognised at a point in
time. 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 strategic report.
The chief operating decision maker has been identified as the Board, which assesses the performance of the operating segments
based on revenue and gross profit.
Revenue
Gross profit
Other operating income
Other administrative expenses
Share based remuneration
Intangibles amortisation
Exceptional costs
Operating loss
Interest payable
Loss before taxation
Taxation credit
Loss after taxation
Managed
service and
technology
£000
64,231
17,620
Network
services
£000
36,201
10,669
Mobile
£000
5,998
2,595
Total
£000
106,430
30,884
611
(23,879)
259
(6,286)
(2,482)
(893)
(1,339)
(2,232)
498
(1,734)
Revenue is wholly attributable to the principal activities of the Group and other than sales of £3.3m to EU countries and £0.4m to
the Rest of the world (2019: £4.3m to EU countries, and £0.7m to the Rest of the world), arises within the United Kingdom.
In 2020 the Group had no customer (2019: None) which accounted for more than 10% of its revenue.
The Board does not regularly review the aggregate assets and liabilities of its segments and accordingly an analysis of these is not
provided.
Other
Intangibles amortisation
Depreciation
Exceptional costs
Managed
service and
technology
£000
‑
‑
(2,482)
Network
services
£000
‑
‑
‑
Central/
inter-
company
£000
(6,286)
(1,906)
‑
Mobile
£000
‑
‑
‑
Total
£000
(6,286)
(1,906)
(2,482)
Maintel Holdings Plc Annual Report & Accounts 2020Financial statementsNotes forming part of the consolidated financial statementsfor the year ended 31 December 2020 continued 71
Total
£000
122,932
35,250
1,035
(26,407)
274
(6,674)
(385)
3,093
(1,329)
1,764
1,434
3,198
Total
£000
(6,674)
(1,962)
(385)
Year ended 31 December 2019
Revenue
Gross profit
Other operating income
Share based remuneration
Other administrative expenses
Intangibles amortisation
Exceptional costs
Operating profit
Interest payable
Profit before taxation
Taxation credit
Profit after taxation
Other
Intangibles amortisation
Depreciation
Exceptional costs
5. Employees
Managed
service and
technology
£000
79,853
21,043
Network
services
£000
37,649
11,715
Mobile
£000
5,430
2,492
Managed
service and
technology
£000
‑
‑
(385)
Network
services
£000
‑
‑
‑
Central/
inter-
company
£000
(6,674)
(1,962)
‑
Mobile
£000
‑
‑
‑
The average number of employees, including directors, during the year was:
Corporate and administration
Sales and customer service
Technical and engineering
Staff costs, including directors, consist of:
Wages and salaries
Social security costs
Pension costs
2020
Number
2019
Number
92
210
258
560
£000
30,112
3,467
824
34,403
100
215
284
599
£000
33,504
3,696
874
38,074
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 £168,000 (2019: £188,000) were payable to the
schemes at the year‑end and are included in other payables.
Maintel Holdings Plc Annual Report & Accounts 2020 Financial statements 72
6. 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:
Director’s emoluments
Pension contributions
2020
£000
851
26
877
2020
£000
243
7
250
2019
£000
1,542
31
1,573
2019
£000
306
6
312
The Group paid contributions into defined contribution personal pension schemes in respect of 8 directors during the year, 4 of
whom were auto-enrolled at minimal contribution levels, and 2 were on both defined contributions and auto-enrolment schemes
(2019: 8, 4 auto-enrolled).
Further details of director remuneration are shown in the Remuneration committee report on page 42.
7. Operating (loss)/profit
This has been arrived at after charging/(crediting):
Depreciation of property, plant and equipment
Depreciation of right of use assets
Amortisation of intangible fixed assets
Other income:
‑ Operating lease rentals receivable – property
- Research and development expenditure credit
Fees payable to the Company’s auditor for the audit of the parent and consolidated
accounts
Fees payable to the Company’s auditor for other services:
- audit of the Company’s subsidiaries pursuant to legislation
‑ audit‑related assurance services
‑ tax compliance services
Fees payable to other auditors
Fees payable for tax compliance services
Foreign exchange movement
Government grant in respect of furloughed employees
Gain on sale of inventory
Loss on disposal of property plant and equipment
2020
£000
665
1,241
6,286
(147)
(464)
47
96
26
‑
‑
42
(90)
(387)
(348)
2
2019
£000
695
1,267
6,674
(251)
(784)
44
95
27
44
65
‑
‑
‑
99
Maintel Holdings Plc Annual Report & Accounts 2020Financial statementsNotes forming part of the consolidated financial statementsfor the year ended 31 December 2020 continued 73
2020
£000
1,060
106
156
17
1,339
2020
£000
11
212
223
(739)
18
(498)
2019
£000
1,029
135
165
‑
1,329
2019
£000
52
(716)
(664)
(843)
73
(1,434)
8. Financial expense
Interest payable on bank loans
Interest payable on deferred consideration
Interest expense on leases
Other interest charges
9. Taxation
UK corporation tax
Corporation tax on (loss)/profit of the year
Adjustment for prior year
Deferred tax (note 21)
Current year
Adjustment for prior year
Taxation on (loss)/profit on ordinary activities
The standard rate of corporation tax in the UK for the year was 19.00% (2019: 19.00%), and therefore the Group’s UK subsidiaries are
taxed at that rate. The differences between the total tax shown above and the amount calculated by applying the standard rate
of UK corporation tax to the (loss)/profit before tax are as follows:
(Loss)/profit before tax
(Loss)/profit at the standard rate of corporation tax in the UK of 19% (2019: 19.0%)
Effect of:
Net income not taxable
Adjustments relating to prior years
Benefit for losses utilised in the year not recognised for tax previously
Effects of overseas tax rates
Origination and reversal of timing differences
2020
£000
(2,232)
(424)
(87)
230
(203)
(4)
(10)
(498)
2019
£000
1,764
335
(277)
(643)
(854)
(6)
11
(1,434)
Prior year adjustments debiting corporation tax of £212,000 include the underpayment of tax relating to the reassessment of a prior
year charge.
Maintel Holdings Plc Annual Report & Accounts 2020 Financial statements 74
10. Dividends paid on ordinary shares
Final 2018, paid 16 May 2019 – 19.5p per share
Interim 2019, paid 4 October 2019 – 15.1p per share
2020
£000
‑
‑
‑
2019
£000
2,790
2,163
4,953
The directors have decided not to recommend a final dividend for 2020 (2019: Nil).
11. Earnings per share
Earnings per share is calculated by dividing the (loss)/profit after tax for the year by the weighted average number of shares in
issue for the year, these figures being as follows:
(Loss)/earnings used in basic and diluted EPS, being (loss)/profit after tax
Adjustments:
Intangibles amortisation
Exceptional costs (note 13)
Tax relating to above adjustments
Share based remuneration
Deferred tax charge on utilisation of Intrinsic tax losses
Interest charge on deferred consideration
Tax adjustments relating to prior years
Benefit for losses utilised in the year not recognised for tax previously
Adjusted earnings used in adjusted EPS
2020
£000
(1,734)
5,453
2,482
(1,507)
(259)
‑
106
230
(203)
4,568
2019
£000
3,198
5,965
385
(1,258)
(274)
532
135
(315)
(854)
7,514
Adjustment for intangibles amortisation is in relation to intangible assets acquired via business combinations.
Maintel Holdings Plc Annual Report & Accounts 2020Financial statementsNotes forming part of the consolidated financial statementsfor the year ended 31 December 2020 continued 75
Weighted average number of ordinary shares of 1p each used as the denominator in
calculating basic EPS
Potentially dilutive shares
Weighted average number of ordinary shares of 1p each used as the denominator in
calculating diluted EPS
(Loss)/earnings per share
Basic
Diluted
Adjusted - basic but after the adjustments in the table above
Adjusted - diluted after the adjustments in the table above
2020
Number
(000s)
14,338
13
14,351
(12.1)p
(12.1)p
31.9p
31.8p
2019
Number
(000s)
14,290
136
14,426
22.4p
22.2p
52.6p
52.1p
The adjustments above have been made in order to provide a clearer picture of the trading performance of the Group.
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.
12. Adjusted earnings before interest, tax, depreciation and
amortisation (Adjusted EBITDA)
(Loss)/profit before tax
Net interest
Depreciation of property, plant and equipment
Depreciation of right of use assets
Amortisation of intangible fixed assets
EBITDA
Share based remuneration
Exceptional costs (note 13)
Adjusted EBITDA
2020
£000
(2,232)
1,339
665
1,241
6,286
7,299
(259)
2,482
9,522
2019
£000
1,764
1,329
695
1,267
6,674
11,729
(274)
385
11,840
Maintel Holdings Plc Annual Report & Accounts 2020 Financial statements 76
13. Exceptional costs
Most of the exceptional costs incurred in the year were related to the restructuring and reorganisation of the Group’s operational
structure. Staff restructuring and other employee related costs of £1,723k (2019: £457k) includes £347k relating to an exceptional
increase in the holiday pay accrual as a result of COVID-19 (2019: Nil). Costs relating to an onerous property lease include a
charge of £430k (2019: Nil) relating to the impairment of a right of use asset associated with a property lease that became onerous
during the period, together with associated running costs in the period and provisions for future running costs. These and the other
costs analysed below have been shown as exceptional costs in the income statement as they are not normal operating expenses:
Staff restructuring and other employee related costs
Costs relating to an onerous property lease
Fees relating to revised credit facilities agreement
Systems integration costs
Impairment of customer relationship asset (see note 14)
Property related and other legal and professional costs
Costs relating to Director's share options
Net effect of the release of provisions relating to acquisitions
(Provision releases)/costs relating to the closure of properties
Remeasurement of deferred consideration to fair value
2020
£000
1,723
597
137
25
‑
‑
‑
‑
‑
‑
2,482
2019
£000
457
23
‑
163
339
173
52
44
(120)
(746)
385
Maintel Holdings Plc Annual Report & Accounts 2020Financial statementsNotes forming part of the consolidated financial statementsfor the year ended 31 December 2020 continued 77
Total
£000
93,785
1,143
483
(339)
95,072
2,082
14. Intangible assets
Cost
At 1 January 2019
Additions
Transfer from plant, property and
equipment
Fair value adjustment
Goodwill
£000
Customer
relationships
£000
Brands
£000
Product
platform
£000
Software
£000
40,516
44,218
3,480
1,333
4,238
-
-
-
-
-
(339)
-
-
-
148
291
-
1,772
73
995
192
-
5,425
2,009
At 31 December 2019
Additions
40,516
43,879
-
-
3,480
-
At 31 December 2020
40,516
43,879
3,480
1,845
7,434
97,154
Amortisation and Impairment
At 1 January 2019
Amortisation in the year
Transfer from plant, property and
equipment
At 31 December 2019
Amortisation in the year
317
-
-
317
-
20,268
5,093
1,295
410
-
-
25,361
4,519
1,705
409
437
226
99
762
263
2,079
945
24,396
6,674
86
185
3,110
1,095
31,255
6,286
At 31 December 2020
317
29,880
2,114
1,025
4,205
37,541
Net book value
At 31 December 2020
At 31 December 2019
40,199
40,199
13,999
18,518
1,366
1,775
820
1,010
3,229
2,315
59,613
63,817
Amortisation charges for the year have been charged through administrative expenses in the statement of comprehensive income.
Software and product platform include capitalised development costs being an internally generated asset.
During the prior year, certain assets misclassified in prior years as plant, property and equipment amounting to £300k were transferred
to intangible in the year.
Maintel Holdings Plc Annual Report & Accounts 2020 Financial statements 78
Goodwill
The carrying value of goodwill is allocated to the cash generating units as follows:
Network services division
Managed service and technology division
Mobile division
2020
£000
21,134
15,758
3,307
40,199
2019
£000
21,134
15,758
3,307
40,199
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 of the assets for that unit; where the recoverable amount of the cash
generating unit is less than the carrying amount of the assets, an impairment loss is recognised.
Projected cash flows are based on based on a five-year horizon which use the approved plan amounts for years 1 to 3, and a
pre-tax discount rate of 12.5% (2019: 12.5%) is applied to the resultant projected cash flows.
Key assumptions used to calculate the cash flows used in the impairment testing were as follows:
Network services division: average annual growth rate 9.8%, terminal growth 2.2%, average gross margin 40.5%.
Managed service and technology division: average annual reduction rate 4.8%, terminal reduction rate 6.3%, average gross
margin 20.8%.
Mobile division, average annual growth rate 0.9%, terminal reduction rate 2.2%, average gross margin 41.1%.
The Group’s impairment assessment at 31 December 2020 indicates that there is significant headroom for each unit.
The discount rate is based on conventional capital asset pricing model inputs and varies to reflect the relative risk profiles of the
relevant cash generating units. Sensitivity analysis using reasonable variations in the assumptions shows no indication of impairment.
15. Subsidiaries
The Company owns investments in subsidiaries including a number which did not trade during the year. The following were the
principal subsidiary undertakings at the end of the year:
Maintel Europe Limited
Maintel International Limited
Maintel Europe Limited provides goods and services in the managed services and technology and network services sectors.
Maintel Europe Limited is the sole provider of the Group’s mobile services. Maintel International Limited provides goods and
services in the managed services and technology sector predominantly in Ireland.
In addition, the following subsidiaries of the Company were dormant as at 31 December 2020:
Maintel Voice and Data Limited
Datapoint Global Services Limited
Maintel Finance Limited
District Holdings Limited
Maintel Network Solutions Limited
Datapoint Customer Solutions Limited
Intrinsic Technology Limited
Maintel Mobile Limited
Warden Holdco Limited
Warden Midco Limited
Azzurri Communications Limited
Each subsidiary company is wholly owned and, other than Maintel International Limited, is incorporated in England and Wales.
Maintel International Limited is incorporated in the Republic of Ireland.
Each subsidiary, other than Maintel International Limited, has the same registered address as the parent. The registered address of
Maintel International Limited is Beaux Lane House, Mercer Street Lower, Dublin 2.
Maintel Holdings Plc Annual Report & Accounts 2020Financial statementsNotes forming part of the consolidated financial statementsfor the year ended 31 December 2020 continued
79
Total
£000
9,304
759
(1,471)
(483)
(263)
7,846
568
(103)
-
8,311
7,258
(1,370)
(185)
(66)
695
6,332
(101)
-
665
6,896
1,415
1,514
16. Property, plant and equipment
Leasehold
Improvements
£000
Office and
computer
equipment
£000
Motor
vehicles
£000
Cost
At 1 January 2019
Additions
Disposals
Transferred to intangible fixed assets
Transferred to right of use assets
At 31 December 2019
Additions
Disposals
Transfer
1,834
-
(925)
-
-
909
37
(93)
(24)
7,423
759
(546)
(483)
(263)
6,890
531
(10)
24
At 31 December 2020
829
7,435
Depreciation
At 1 January 2019
Disposals
Transferred to Intangible fixed assets
Transferred to right of use assets
Provided in year
At 31 December 2019
Disposals
Transfer
Provided in year
At 31 December 2020
Net book value
At 31 December 2020
At 31 December 2019
1,276
(925)
-
-
93
444
(93)
54
91
496
333
465
5,935
(445)
(185)
(66)
602
5,841
(8)
(54)
574
6,353
1,082
1,049
47
-
-
-
-
47
-
-
-
47
47
-
-
-
-
47
-
-
47
-
-
Certain assets misclassified in prior years as leasehold improvements, were transferred to office and computer equipment.
Maintel Holdings Plc Annual Report & Accounts 2020 Financial statements 80
17. Right of use assets
Cost
At 1 January 2019
Additions
At 31 December 2019
Additions
Dilapidations provision reclassification
At 31 December 2020
Depreciation and impairment
At 1 January 2019
Charge for the year
At 31 December 2019
Depreciation charge for the year
Impairment for the year
At 31 December 2020
Net book value
At 31 December 2020
At 31 December 2019
Land and
buildings
£000
Office and
computer
equipment
£000
Motor
vehicles
£000
4,487
-
4,487
844
319
5,650
-
951
951
883
430
2,264
3,386
3,536
404
189
593
229
-
822
66
187
253
246
-
499
323
340
296
44
340
-
-
340
-
129
129
112
-
241
99
211
Total
£000
5,187
233
5,420
1,073
319
6,812
66
1,267
1,333
1,241
430
3,004
3,808
4,087
Dilapidations provisions have been reclassified during the period from right of use assets to other payables.
The right of use asset relating to the Group’s leased offices in Haydock has been fully impaired during the period. The
corresponding charge has been recognised within exceptional items in the income statement for £430,000 (2019: £Nil). The
property has been vacant since the end of the prior period and is likely to remain vacant for the remaining life of the lease term.
18. Inventories
Maintenance stock
Stock held for resale
Cost of inventories recognised as an expense
Provisions of £79,000 were made against the maintenance stock in 2020 (2019: £333,000).
2020
£000
228
1,637
1,865
14,867
2019
£000
1,364
1,879
3,243
20,263
Maintel Holdings Plc Annual Report & Accounts 2020Financial statementsNotes forming part of the consolidated financial statementsfor the year ended 31 December 2020 continued 81
2020
£000
13,188
789
8,781
22,758
2020
£000
1,050
2019
£000
15,690
691
10,540
26,921
2019
£000
-
19. Trade and other receivables
Trade receivables
Other receivables
Prepayments and accrued income
All amounts shown above fall due for payment within one year.
Accrued income (non-current)
In adopting IFRS 9, the Group now reviews the amount of credit loss associated with its trade receivables and accrued income
based on forward looking estimates that take into account current and forecast credit conditions as opposed to relying on past
historical default rates. In adopting IFRS 9 the Group has applied the Simplified Approach applying a provision matrix based on
number of days past due to measure lifetime expected credit losses and after taking into account customer sectors with different
credit risk profiles and current and forecast trading conditions.
Movements in contract assets and liabilities were as follows:
– Accrued income increased from £1.9m in 2019 to £2.6m at the reporting date;
– Deferred Income decreased from £18.7m in 2019 to £15.8m at the reporting date; and
– Deferred costs net of accrued costs have increased from £6.0m in 2019 to £6.6m at the reporting date.
The corresponding adjustments for these movements represent revenues and costs recognised in the income statement in the
year, driven by a decline in the managed service base and associated level of advance billings, combined with a reduction in
deferred income primarily as a result of a lower number of projects in delivery phase compared to the prior year end, together
with an increase in accrued income resulting from the sale of the consumable and spares inventory.
20. Trade and other payables
Current trade and other payables
Trade payables
Other tax and social security
Other payables
Accruals
Deferred managed service income (note 2(c))
Other deferred income (note 2(c))
Deferred consideration in respect of business combination
Non-current other payables
Deferred consideration in respect of business combination
Intangible licences and other payables
Advanced mobile commissions
Other payables
2020
£000
9,358
5,533
5,234
4,550
13,199
2,601
1,175
41,650
2020
£000
1,227
436
175
393
2,231
2019
£000
10,905
3,321
4,816
4,795
14,283
4,454
990
43,564
2019
£000
2,403
125
370
-
2,898
Maintel Holdings Plc Annual Report & Accounts 2020 Financial statements 82
21. Deferred taxation
Net liability at 1 January 2019
Charge/(credit) to consolidated statement of
comprehensive income
Adjustment to prior year to consolidated statement of
comprehensive income
Credit to consolidated statement of comprehensive
income in respect of anticipated further use of tax losses
Net liability at 31 December 2019
Charge/(credit) to consolidated statement of
comprehensive income
Adjustment to prior year to consolidated statement of
comprehensive income
Credit to consolidated statement of comprehensive
income in respect of anticipated further use of tax losses
Net liability at 31 December 2020
Property,
plant and
equipment
£000
Intangible
assets
£000
(1,139)
5,085
365
(1,134)
(500)
-
(1,274)
(58)
-
3,893
301
(1,036)
(196)
-
(1,169)
224
-
3,081
Tax
losses
£000
(631)
-
631
(74)
(74)
-
74
(9)
(9)
Other
£000
(8)
-
-
-
(8)
5
(84)
-
(87)
Total
£000
3,307
(769)
73
(74)
2,537
(730)
18
(9)
1,816
The deferred tax liability represents a liability established under IFRS on the recognition of an intangible asset in relation to the
Maintel Mobile, Datapoint, Proximity, Azzurri, Intrinsic and Atos acquisitions.
The deferred tax liability balance at 31 December 2020 has been calculated on the basis that the associated assets and liabilities
will unwind at 19%, being the rate prevailing at the time of the amortisation charge.
22. Borrowings
Current bank overdraft – secured
Current bank loan – secured
Non-current bank loan – secured
2020
£000
3,845
18,422
-
2019
£000
3,696
-
21,883
On 8 April 2016, the Group entered into new facilities with the National Westminster Bank Plc to support the acquisition of Azzurri.
These consisted of a revolving credit facility totalling £36m (the “RCF”) in committed funds on a reducing basis for a five year term
(with an option to borrow up to a further £20m in uncommitted accordion facilities).
Under the terms of the facility agreement, the committed funds reduce to £31m on the three year anniversary, and to £26m on the
four year anniversary from the date of signing.
On 26 May 2020, the Group signed an amendment and extension to its current bank facilities with the National Westminster Bank
Plc (“NWB”). The current facilities due to expire 8 April 2021 have been extended to 27 October 2021. The revised facility has been
increased to £34.5m consisting of a revolving credit facility (“RCF”) of £30m in committed funds on a reducing basis and a £4.5m
amortising term loan issued under the Coronavirus business interruption loan scheme (“CLBILS”) by the British Business Bank, with a
maturity date of 27 October 2021. Interest terms for the RCF are on a ratchet to LIBOR according to the Group’s net leverage ratio,
whilst on the term loan are linked to the base rate plus a fixed margin.
Covenants based on adjusted EBITDA to net finance charges and net debt to EBITDA are tested on a quarterly basis.
The company was in compliance with its covenants ratios tests throughout the year ended 31 December 2020.
The non-current bank loan above is stated net of unamortised issue costs of debt of £0.1m (31 December 2019: £0.1m).
Maintel Holdings Plc Annual Report & Accounts 2020Financial statementsNotes forming part of the consolidated financial statementsfor the year ended 31 December 2020 continued 83
The facilities are secured by a fixed and floating charge over the assets of the Company and its subsidiaries. Interest is payable on
amounts drawn on the revolving credit facility and overdraft facility at a covenant-depending tiered rate of 1.80 % to 3.10% per
annum over LIBOR, with a reduced rate payable on undrawn facility.
The directors consider that there is no material difference between the book value and fair value of the loan.
On the 14 May 2021 the Group entered into an amendment and extension of its current facility with its incumbent lender, the
National Westminster Bank Plc (see note 31).
23. Lease liabilities
Maturity analysis – contractual undiscounted cash flows
In one year or less
Between one and five years
In five years or more
Total undiscounted lease liabilities at 31 December 2020
Current
Non-current
Lease liabilities included in the statement of financial position
Amounts recognised in the comprehensive income statement
Interest expense on lease liabilities
Expenses relating to short term leases
Amounts recognised in the statement of cash flows
Total cash outflow
2020
£000
1,214
2,667
436
4,317
1,092
2,873
3,965
156
95
2019
£000
1,174
3,131
460
4,765
987
3,367
4,354
165
98
1,174
1,200
During the years ended 31 December 2020 and 31 December 2019 there were no variable lease payments not included in the
measurement of lease liabilities and there were no sale and leaseback transactions. Income from subleasing right of use assets in
the year was £147,000 (2019: £251,000).
Maintel Holdings Plc Annual Report & Accounts 2020 Financial statements 84
24. Financial instruments
The Group’s financial assets and liabilities mainly comprise cash, borrowings, trade and other receivables, trade and other
payables and lease liabilities. The carrying value of all financial assets and liabilities equals fair value given their short term in nature.
Non-current financial assets
Accrued income
Current financial assets
Trade receivables
Accrued income
Other receivables
Financial assets measured at
amortised cost
2020
£000
2019
£000
1,050
1,050
13,188
1,516
789
15,493
-
-
15,690
1,929
691
18,310
Financial liabilities measured at
amortised cost
2020
£000
2019
£000
Non-current financial liabilities
Other payables
Secured bank loan
Deferred consideration in respect of business combination
Lease liabilities
Current financial liabilities
Trade payables
Short-term borrowings
Other payables
Accruals
Deferred consideration in respect of business combination
Lease liabilities
The Group held the following foreign currency denominated financial assets and financial liabilities
1,004
-
1,227
2,873
5,104
9,358
22,267
5,234
4,550
1,175
1,092
43,676
US Dollars
Euros
Assets
Liabilities
2020
£000
78
552
630
2019
£000
120
371
491
2020
£000
1,650
3
1,653
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.
495
21,883
2,403
3,367
28,148
10,905
3,696
4,816
4,795
990
987
26,189
2019
£000
950
6
956
Maintel Holdings Plc Annual Report & Accounts 2020Financial statementsNotes forming part of the consolidated financial statementsfor the year ended 31 December 2020 continued 85
Credit risk
Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. 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 was represented by the carrying value of trade and other receivables, against which
£336,000 is provided at 31 December 2020 (2019: £336,000). The provision represents an estimate of potential bad debt 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 2020 owed the Group £0.7m including VAT (2019: £0.8m).
The Group’s customers are spread across a broad range of sectors and consequently it is not otherwise exposed to significant
concentrations of credit risk on its trade receivables.
The movement on the provision for trade receivables is as follows:
Provision at start of year
Provision created
Provision reversed
Provision at end of year
2020
£000
336
180
(180)
336
2019
£000
439
225
(328)
336
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 has applied the Simplified
Approach applying a provision matrix based on number of days past due to measure lifetime expected credit losses and after
taking into account customer sectors with different credit risk profiles and current and forecast trading conditions. The Group’s
provision matrix is as follows:
31 December 2020
Expected credit loss % range
Gross debtors (£’000)
Expected credit loss rate (£’000)
Accrued income
31 December 2019
Expected credit loss % range
Gross debtors (£’000)
Expected credit loss rate (£’000)
Accrued income
Current
< 30 days
31–60 days
> 60 days
Total
0%-1%
11,626
(60)
1,516
2%-5%
1,083
(29)
-
3%-10%
10%-100%
376
(21)
-
439
(226)
1,350
13,524
(336)
2,866
15,754
Current
< 30 days
31–60 days
> 60 days
Total
0%-1%
11,485
(75)
1,929
2%-5%
3,129
(54)
-
3%-10%
5%-100%
550
(38)
-
862
(169)
-
16,026
(336)
1,929
17,619
Receivables are grouped based on the credit terms offered. The probability of default is determined at the year-end based on
the aging of the receivables and historical data about default rates on the same basis. That data is adjusted if the Company
determines that historical data is not reflective of expected future conditions due changes in the nature of its customers and how
they are affected by external factors such as economic and market conditions.
Maintel Holdings Plc Annual Report & Accounts 2020 Financial statements 86
Foreign currency risk
The functional currency of all Group companies is Sterling apart from Maintel International Limited, which is registered in and
operates from the Republic of Ireland and whose functional currency is the Euro. The consolidation of the results of that company
is therefore affected by movements in the Euro/Sterling exchange rate. In addition, some Group companies transact with certain
customers and suppliers in Euros or dollars, and those transactions are affected by exchange rate movements during the year but
are not deemed material in a Group context. Sensitivity to exchange rate movements is considered to be immaterial.
Interest rate risk
The Group had total borrowings of £22.3m at 31 December 2020 (2019: £25.7m). The interest rate charged is related to LIBOR and
bank rate respectively and will therefore change as those rates change. If interest rates had been 0.5% higher/lower during 2020,
and all other variables were held constant, the Group’s loss (2019: profit) for the year would have been £126,000 (2019: £156,000)
higher/lower (2019: lower/higher) due to the variable interest element on the loan.
Liquidity risk
Liquidity risk represents the risk that the Group will not be able to meet its financial obligations as they fall due. This risk is managed
by balancing the Group’s cash balances, banking facilities and reserve borrowing facilities in the light of projected operational
and strategic requirements.
The following table details the contractual maturity of financial liabilities based on the dates the liabilities are due to be settled:
Financial liabilities:
Trade payables
Other payables
Lease liabilities
Accruals
Borrowings (including future interest)
Deferred consideration
At 31 December 2020
Trade payables
Other payables
Lease liabilities
Accruals
Borrowings (including future interest)
Deferred consideration
At 31 December 2019
Market risk
0 to 6 months
£000
6 to 12 months
£000
2 to 5 Years
£000
9,358
4,541
581
4,550
413
583
20,026
-
693
511
-
22,670
592
24,466
-
1,004
2,873
-
-
1,227
5,104
0 to 6 months
£000
6 to 12 months
£000
2 to 5 Years
£000
10,905
3,928
482
4,795
438
492
21,040
-
888
505
-
422
498
2,313
-
495
3,367
-
26,395
2,403
32,660
Total
£000
9,358
6,238
3,965
4,550
23,083
2,402
49,596
Total
£000
10,905
5,311
4,354
4,795
27,255
3,393
56,013
As noted above, the interest payable on borrowings is dependent on the prevailing rates of interest from time to time.
Maintel Holdings Plc Annual Report & Accounts 2020Financial statementsNotes forming part of the consolidated financial statementsfor the year ended 31 December 2020 continued 87
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, translation
reserve 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.
25. Share capital
Ordinary shares of 1p each
2020
Number
Allotted, called up and fully paid
2020
£000
2019
Number
14,361,492
14,322,059
144
2019
£000
143
The Company adopted new Articles on 27 April 2016, which dispensed with the need for the Company to have an authorised
share capital. The Company has one class of ordinary shares which carry no right to fixed income. All of the Company’s shares in
issue are fully paid and each share carries the right to vote at general meetings.
39,433 shares were issued in the year (2019: 125,000) for consideration of £394 (2019: £235,000). No shares were repurchased during
the year (2019: Nil).
26. Reserves
Share premium, translation reserve, and retained earnings represent balances conventionally attributed to those descriptions.
Other reserves include a capital redemption reserve of £31,000 (2019: £31,000) and a translation reserve of £42,000 (2019: £36,000).
The capital redemption reserve represents the nominal value of ordinary shares repurchased and cancelled by the Company and
is non-distributable in normal circumstances.
The Group having no regulatory capital or similar requirements, its primary capital management focus is on maximising earnings
per share and therefore shareholder return.
The directors have proposed that there will be no final dividend in respect of 2020 (2019: £Nil)
27. Share Incentive Plan
The Company established the Maintel Holdings Plc Share Incentive Plan (“SIP”) in 2006, which was updated in 2016. The SIP is open
to all employees and executive directors with at least 6 months’ continuous service with a Group company, and allows them 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 and directors 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.
Maintel Holdings Plc Annual Report & Accounts 2020 Financial statements 88
28. Share based payments
On 18 May 2009 the directors of the Company approved the adoption of the Maintel Holdings Plc 2009 Option Plan and on
20 August 2015 they approved the Maintel 2015 Long-term Incentive Plan. The Remuneration committee’s report on page 42
describes the options granted over the Company’s ordinary shares.
In aggregate, options are outstanding over 2.0% 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.
Outstanding at 1 January
Granted during the year
Lapsed during the year
Exercised during the year
Outstanding at 31 December
Exercisable at year end
2020
Number of
Options
295,236
75,000
(99,721)
(24,433)
246,082
15,082
2020
Weighted
Average
Exercise price
354.56p
236.47p
294.17p
1.00p
378.14p
547.12p
2019
Number of
Options
422,272
155,000
(171,627)
(110,409)
295,236
57,236
2019
Weighted
Average
Exercise price
218.35p
450.90p
197.90p
212.40p
354.56p
394.39p
The weighted average share price at the exercise date of the exercised shares was 219.06p (2019: 577.14). The weighted average
contractual life of the outstanding options was 8 years (2019: 8 years), exercisable in the range 1p to 880p.
24,433 shares were exercised in the year by way of issue of new shares.
2020
Exercisable
Price range
Number of
Share options
1p
221p to 274p
430p to 525p
675p to 880p
13,673
75,000
138,000
19,409
246,082
The Group recognised £259,000 of income related to equity-settled share-based payments in the year (2019: £274,000).
The fair value of options granted during the year is determined by applying the Black-Scholes model. The expense is apportioned
over the vesting period of the option and is based on the number which are expected to vest and the fair value of these options
at the date of grant.
The inputs into the Black-Scholes model in respect of options granted in the period are as follows:
Date of grant
Number of options granted
Share price at date of grant
Exercise price
Option life in years
Risk-free rate
Expected volatility
Expected dividend yield
Fair value of options
17 January
18 February
17 September
10,000
15,000
50,000
274p
274p
3
0.63%
38.02%
12.59%
0.265p
263p
263p
3
0.61%
37.68%
13.12%
0.239p
221p
221p
3.3
0.19%
39.17%
0%
0.619p
Maintel Holdings Plc Annual Report & Accounts 2020Financial statementsNotes forming part of the consolidated financial statementsfor the year ended 31 December 2020 continued 89
Expected volatility was determined by calculating the historical volatility of the Group’s share price for the five-year period
prior to the date of grant of the share option. The expected life used in the model is based on management’s best estimate.
The Group did not enter into any share-based payment transactions with parties other than employees during the current or
previous period.
29. Operating leases
As at 31 December, the Group had future minimum rentals receivable under non-cancellable operating leases as set out below:
Part of the London premises, had been sublet under a lease which expired during the period.
The total future minimum lease payments are due as follows:
Not later than one year
30. Related party transactions
Transactions with key management personnel
2020
Land and
Buildings
£000
-
-
2019
Land and
buildings
£000
133
133
Key management personnel comprise the directors and executive officers. The remuneration of the individual directors is disclosed
in the Remuneration committee report. The remuneration of the directors and other key members of management during the year
was as follows:
Short term employment benefits
Social security costs
Contributions to defined contribution pension schemes
2020
£000
1,187
184
51
1,422
2019
£000
1,416
181
47
1,644
Other transactions
The Group traded in the year with A J McCaffery, transactions in 2020 and 2019 amounting in aggregate to less than £1,000.
In 2020, the Group provided telecommunications services to Focus 4 U Limited, amounting to £500 (2019: £2,000) and to Zinc
Media Group Plc £Nil (2019: £3,000) companies of which N J Taylor is a director.
The Company paid fees of £7,000 (2019: £Nil) to Anchusa Consulting Limited, a company of which A P Nabavi is a shareholder and
director, in respect of consultancy services provided to the Company relating to the extension of its credit facilities.
Maintel Holdings Plc Annual Report & Accounts 2020 Financial statements
90
31. Post balance sheet events
Disposal
On 30 April 2021 the disposal of our Managed Print Services business unit to Corona Corporate Services was completed for a
consideration of £4.5m payable in cash on completion, subject to a customary working capital adjustment. The Company has
used the proceeds from the disposal to strengthen the Company’s balance sheet through a further reduction in its debt position.
Banking facilities
On 14 May 2021, the Group signed an amendment and extension to its current bank facilities with the National Westminster
Bank Plc (“NWB”).The current facilities, which were previously due to expire 27 October 2021, have been extended for a further
12 months to 27 October 2022. The revised facility consists of a revolving credit facility (“RCF”) of £25.3m in committed funds on a
reducing basis to term with the existing £4.5m amortising term loan issued under the Coronavirus business interruption loan scheme
(“CLBILS”) by the British Business Bank, remains unchanged maturing on 27 October 2021. Interest terms for the RCF are linked to
SONIA plus a fixed margin, whilst on the term loan are linked to the base rate plus a fixed margin.
There are no other events subsequent to the reporting date which would have a material impact on the financial statements.
Maintel Holdings Plc Annual Report & Accounts 2020Financial statementsNotes forming part of the consolidated financial statementsfor the year ended 31 December 2020 continued Company balance sheet
at 31 December 2020
Company number 3181729
Non-current assets
Investment in subsidiaries
Current assets
Debtors
Total current assets
Total assets
Current liabilities
Creditors
Borrowings
Non-current liabilities
Borrowings
Total non-current liabilities
Total liabilities
Total net assets
Equity
Issued share capital
Share premium
Capital redemption reserve
Retained earnings
Shareholders’ funds
Note
2020
£000
2019
£000
2020
£000
49,560
4
5
6
7
8
12,827
14,147
1,255
23,065
24,320
-
1,224
4,794
6,018
21,883
12,827
62,387
-
24,320
38,067
144
24,588
31
13,304
38,067
91
2019
£000
49,560
14,147
63,707
21,883
27,901
35,806
143
24,588
31
11,044
35,806
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
£2.5m (2019: £6.6m).
The Company financial statements were approved and authorised for issue by the Board on 1 June 2021 and were signed on its
behalf by:
Mark Townsend
Director
The notes on pages 93 to 97 form part of these financial statements.
Maintel Holdings Plc Annual Report & Accounts 2020 Financial statements 92
Company statement of changes in equity
for the year ended 31 December 2020
Note
3
At 1 January 2019
Profit and total comprehensive income
for year
Dividends paid
Issue of new ordinary shares
Grant of share options
At 31 December 2019
Profit and total comprehensive income
for year
Issue of new ordinary shares
Grant of share options
At 31 December 2020
Share
capital
£000
Share
premium
£000
Capital
redemption
reserve
£000
Retained
earnings
£000
142
24,354
31
9,652
-
-
1
-
-
-
234
-
143
24,588
-
1
-
-
-
-
144
24,588
-
-
-
-
31
-
-
-
31
6,619
(4,953)
-
(274)
11,044
2,519
-
(259)
13,304
Total
£000
34,179
6,619
(4,953)
235
(274)
35,806
2,519
1
(259)
38,067
The notes on pages 93 to 97 form part of these financial statements.
Maintel Holdings Plc Annual Report & Accounts 2020Financial statements Notes forming part of the Company financial statements
at 31 December 2020
93
1. Accounting policies
The Company financial statements have been prepared in
accordance with Financial Reporting Standard 101 Reduced
Disclosure Framework.
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 have been prepared
in accordance with FRS 101 and the Companies Act 2006.
(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.
(c) Going concern
The Group has a sound financial record including strong
operating cash flows derived from a substantial level of
recurring revenue across a range of sectors. Post year end
an amendment and extension to the current bank facilities
with the National Westminster Bank (“NWB”) was signed on
14 May 2021 (see note 31), extending the facility for 12 months
to October 2022 on improved terms. The key covenants that
will prevail over this period include net leverage ratio and
interest cover tests.
In addition, the Group’s balance sheet was further
strengthened by the disposal of our Managed Print Services
business unit on 30 April 2021 for a consideration of £4.5m,
proceeds from which has been used to reduce the Group’s
debt position further.
As highlighted in the risk management section
(see pages 23‑24) the Board has put robust business continuity
plans in place to ensure continuity of trading and operations.
In addition, to address the trading impact of COVID-19 during
FY 20 the directors have already taken significant steps to
preserve working capital and maintain a satisfactory liquidity
position (see page 25, COVID‑19 section).
The Group’s forecasts and projection models, taking into
account uncertainty around the medium-term impact of the
pandemic with regard to both project delivery and timing
of pipeline conversion, means that actual performance
could fall short of management forecasts in terms of revenue
expectations. The Board has reviewed the model in detail
taking account of reasonably possible changes in trading
performance, including revenues falling below a COVID
affected FY 20 by 3%, and further mitigating actions it could
take such as further overhead savings and capital expenditure
programme postponement. As a result, the Board believes
that the Group has sufficient headroom in its agreed funding
arrangements to withstand a greater negative impact on its
cash flow than it currently expects.
On this basis, whilst it is acknowledged that there is continued
uncertainty surrounding the future impacts of COVID-19, 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.
(d) Financial assets and liabilities
The Company’s financial assets and liabilities mainly comprise
cash, borrowings, other receivables, trade and other payables.
Other receivables are not interest bearing and are stated at
their amortised cost 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 amortised cost.
(e) Borrowings
Interest bearing bank loans and overdrafts are initially
recorded at the value of the amount received, net of
attributable transaction costs. Interest bearing borrowings are
subsequently stated at amortised cost with any difference
between cost and redemption value being recognised in the
consolidated statement of comprehensive income over the
period of the borrowing using the effective interest method.
(f) 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.
(g) 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.
Maintel Holdings Plc Annual Report & Accounts 2020 Financial statements 94
(h) Disclosure exemptions adopted
In preparing these financial statements the Company has taken advantage of disclosure exemptions conferred by FRS101.
Therefore, these financial statements do not include:
• certain disclosures regarding the Company’s capital;
• a statement of cash flows;
• the effect of future accounting standards not yet adopted;
• the disclosure of the remuneration of key management personnel; and
• disclosure of related party transactions with other wholly owned members of the Group headed by Maintel Holdings Plc.
In addition, and in accordance with FRS101 further disclosure exemptions have been adopted because equivalent disclosures
are included in the consolidated financial statements of Maintel Holdings Plc. These financial statements do not include certain
disclosures in respect of:
• share based payments
• impairment of assets
• Disclosures required in relation to financial instruments and capital management
(j) Judgements and key areas of estimation uncertainty
The Company makes certain estimates and assumptions regarding the future. Estimates and judgements are continually
evaluated based on historical experience and other factors, including expectations of future events that are believed to be
reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions. The
principal use of estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of
assets and liabilities within the next financial year relates to the potential impairment of the carrying value of investments.
The Company assesses at each reporting date whether there is an indication that its investments 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 14
of the consolidated accounts. These estimates include the asset’s future cash flows and an appropriate discount to reflect the time
value of money. The range of estimates reflects the relative risk profiles of the relevant cash generating units.
2. Employees
Staff costs, including directors, consist of:
Wages and salaries
Social security costs
Pension costs
The average number of employees, including directors, during the year was:
2020
£000
832
107
27
966
2019
£000
1,164
151
33
1,348
2020
Number
8
2019
Number
9
Maintel Holdings Plc Annual Report & Accounts 2020Financial statementsNotes forming part of the Company financial statementsat 31 December 2020 continued 95
3. Dividends paid on ordinary shares
Details of dividends paid and payable are shown in note 10 of the consolidated financial statements.
4. Investment in subsidiaries
At 1 January 2019 and 31 December 2019
At 31 December 2020
Provision for impairment
At 1 January 2019, 31 December 2019 and 31 December 2020
Net book value
At 31 December 2020
At 31 December 2019
Details of the Company’s subsidiaries are shown in note 15 of the consolidated financial statements.
5. Debtors
Amounts owed by subsidiary undertakings
Other tax and social security
Prepayments and accrued income
Deferred tax asset
All amounts shown under debtors fall due for payment within one year.
6. Creditors
Amounts due to subsidiary undertakings
Trade creditors
Accruals and deferred income
Shares in
subsidiary
undertakings
£000
49,640
49,640
80
49,560
49,560
2019
£000
14,037
95
15
-
2020
£000
12,791
14
12
10
12,827
14,147
2020
£000
1,022
30
203
1,255
2019
£000
836
61
327
1,224
Maintel Holdings Plc Annual Report & Accounts 2020 Financial statements
96
7. Borrowings
Current bank overdraft – secured
Current bank loans – secured
Non-current bank loan – secured
2020
£000
4,643
18,422
-
2019
£000
4,794
-
21,883
On 8 April 2016, the Group entered into new facilities with the National Westminster Bank Plc to support the acquisition of Azzurri.
These consisted of a revolving credit facility totalling £36m (the “RCF”) in committed funds on a reducing basis for a five year term
(with an option to borrow up to a further £20m in uncommitted accordion facilities).
Under the terms of the facility agreement, the committed funds reduce to £31m on the three year anniversary, and to £26m on the
four year anniversary from the date of signing.
On 26 May 2020, the Group signed an amendment and extension to its current bank facilities with the National Westminster Bank
Plc (“NWB”). The current facilities due to expire 8 April 2021 have been extended to 27 October 2021. The revised facility has been
increased to £34.5m consisting of a revolving credit facility (“RCF”) of £30m in committed funds on a reducing basis and a £4.5m
amortising term loan issued under the Coronavirus business interruption loan scheme (“CLBILS”) by the British Business Bank, with a
maturity date of 27 October 2021. Interest terms for the RCF are on a ratchet to LIBOR according to the Group’s net leverage ratio,
whilst on the term loan are linked to the base rate plus a fixed margin.
Covenants based on adjusted EBITDA to net finance charges and net debt to EBITDA are tested on a quarterly basis. The
company was in compliance with its covenants ratios tests throughout the year ended 31 December 2020.
The non‑current bank loan above is stated net of unamortised issue costs of debt of £0.1m (31 December 2019: £0.1m).
The facilities are secured by a fixed and floating charge over the assets of the Company and its subsidiaries. Interest is payable on
amounts drawn on the revolving credit facility and overdraft facility at a covenant‑depending tiered rate of 1.80 % to 3.10% per
annum over LIBOR, with a reduced rate payable on undrawn facility.
The directors consider that there is no material difference between the book value and fair value of the loan.
On the 14 May 2021 the Group entered into an amendment and extension of its current facility with its incumbent lender, the
National Westminster Bank Plc (see note 11).
8. Share capital
Ordinary shares of 1p each
Allotted, called up and fully paid
2020
Number
2019
Number
14,361,492
14,322,059
2020
£000
144
2019
£000
143
The Company adopted new Articles on 27 April 2019, which dispensed with the need for the Company to have an authorised
share capital.
39,433 shares were issued in the year (2019: 125,000) for consideration of £394 (2019: £235,000). No shares were repurchased during
the year (2019: Nil).
Maintel Holdings Plc Annual Report & Accounts 2020Financial statementsNotes forming part of the Company financial statementsat 31 December 2020 continued
97
9. Related party transactions
Transactions with other Group companies have not been disclosed as permitted by FRS101, as the Group companies are wholly
owned.
10. Contingent liabilities
As security on the Group’s loan and overdraft facilities, the Company has entered into a cross guarantee with its subsidiary
undertakings in favour of the National Westminster Bank Plc. At 31 December 2020 each subsidiary undertaking had a net positive
cash balance.
The Company has entered into an agreement with Maintel Europe Limited, guaranteeing the performance by Maintel Europe
Limited of its obligations under the lease on its London premises.
11. Post balance sheet events
On 14 May 2021, the Group signed an amendment and extension to its current bank facilities with the National Westminster
Bank Plc (“NWB”).The current facilities, which were previously due to expire 27 October 2021, have been extended for a further
12 months to 27 October 2022. The revised facility consists of a revolving credit facility (“RCF”) of £25.3m in committed funds on a
reducing basis to term with the existing £4.5m amortising term loan issued under the Coronavirus business interruption loan scheme
(“CLBILS”) by the British Business Bank, remains unchanged maturing on 27 October 2021. Interest terms for the RCF are linked to
SONIA plus a fixed margin, whilst on the term loan are linked to the base rate plus a fixed margin.
There are no other events subsequent to the reporting date which would have a material impact on the financial statements.
Maintel Holdings Plc Annual Report & Accounts 2020 Financial statements 98 Maintel Holdings Plc Annual Report & Accounts 2020
Directors, Company details and advisers
Directors
J D S Booth
I G MacRae
M V Townsend
D J Davies
A P Nabavi
N J Taylor
Chairman, non‑executive director
Chief executive officer
Chief financial officer
Chief technology officer
Non-executive director
Non‑executive director
Secretary and registered office
ONE Advisory Limited, 160 Blackfriars Road, London SE1 8EZ
Company number
3181729
Auditors
RSM UK Audit LLP, 25 Farringdon Street, London EC4A 4AB
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 6ZZ
Tel: 0370 707 1182
Designed and Printed by Perivan
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Maintel Holdings Plc
160 Blackfriars Road,
London SE1 8EZ
www.maintel.co.uk