Maintel : AGM and General Meetings Document

2021

Annual Report & Accounts

Maintel Holdings Plc

Group revenue

(2020: £106.4m)

Contracted cloud seats

(2020: 102,000)

Group adjusted EBITDA1

(2020: £9.5m)

1 Adjusted EBITDA is EBITDA of £13.4m (2020: £7.3m), adjusted for exceptional items and share based payments (note 11).

Recurring revenue

(2020: 73%)

1

Overview 2021

Ioan MacRae, Chief Executive Officer

I am pleased with the Group's performance in 2021 despite the combined effects of the national lockdown in early 2021, the wave of Omicron in the latter part of the year, and latterly the global supply chain issues surrounding semi-conductors that is affecting the whole market. To achieve, on a like-for-like 1basis, organic growth in both revenue and adjusted EBITDA , whilst managing these challenges, is testament to the product offerings we now have and the admirable performance from the reshaped Maintel Team.

I am delighted that we have secured a three-year agreement with HSBC UK, providing a new and improved banking facility for £26m. The team at HSBC have been hugely supportive of Maintel since we began discussions around a new banking partner, and I look forward to enjoying the benefits and flexibilities that our new facilities offer. I would like to thank the team at NatWest Bank for their service to Maintel over the last six years and the support that they have shown.

As mentioned in the 2020 Annual Report, 2021 was about setting the foundation of the business for a return to organic growth, whilst introducing strategic new products and solution offerings to ensure our differentiation and market relevance for future years. Through 2021, the team focused on the three strategic pillars, namely: Control, Focus, Invest.

Control

• • The restructuring of the business during 2020 and early 2021 has ensured we operated with the right structure and cost base, lowering headcount to an average of 515 employees, whilst upskilling our workforce and acquiring the talent we needed

• • Business forecasting across all departments has remained accurate and predictable, whether that be on recurring revenues or net new solution sales for Tech and PS, ensuring effective management and investment predictions

• • The Sales Team has delivered consistently throughout 2021 achieving budget on either GM or revenue and are expected to also deliver to budget in Q1 2022

• • Net debt has further reduced to £19.4m, down £2.9m from £22.3m, as of December 31st 2021

Focus

• • We expanded our core portfolio, specifically on Public and Private cloud solutions for UCaaS and CCaaS and enhanced our portfolio on LAN and WiFi with SD-WAN capability, which contributed to major customer contracts being signed worth over £50m TCV

• • We enhanced our logistics capability by a strategic outsourcing of the services to Agilitas in December 2020, delivering improved project and service delivery to customers, whilst also reducing our real estate and cost base

• • The disposal of our Doc Sols in April 2021 for £4.5m, further reduced our debt and cost base, whilst also allowing us to focus on our core capabilities and enhance our product offerings

• • We enhanced our managed services through specialist partnerships with Allvotec, J Brand and Empowered, to ensure we can deliver projects on our new portfolio, without the need to invest in headcount and accreditations

Invest

• • We continued to invest in our own IP, specifically on Callmedia CX Now which has seen new contracts signed in 2021

• • ICON Portal was launched in June 2021, allowing customers a "single pane" into the services they take from Maintel. Further investment and development will see continued enhancements to ICON Portal which will differentiate Maintel as a Managed Services Partner

• • Our cloud portfolio was expanded, with the full launch of Genesys CCaaS and Ringcentral UCaaS solutions, as well as development for ICON private cloud and MS Teams Connector, which greatly contributed in Maintel achieving a 30% increase in contracted cloud seats

• • The introduction of the SD-WAN portfolio, enhancing our existing LAN and WiFi capabilities, as well as building on Secure Homeworker, has seen Maintel win some major customer contracts in FY21, including JD Sports, Sanctuary Housing, Biffa and Currys

• • These new portfolio and service offerings, which were introduced for the start of 2021 have proven very successful already and contributed to the Group securing major customer contracts, worth over £50m to-date

• • We established an ESG Office by broadening our governance and compliance team with the appointment of Joanne Ballard as ESG Strategy and Compliance Director, ensuring the Group invests in all elements of ESG to support a sustainable future, as well as ensuring our compliance in public and private sector tenders, banking compliance and supporting our shareholders in sustainable investment

• • Investment will continue as we look to introduce new technology in 2022, with CPaaS on Amazon and Twillio, enhancement of Microsoft Teams integration, and offerings around 5G and IOT

Despite the headwinds faced, I am immensely proud of the Maintel Team for continuous focus on our customers and the service we offer them, despite working in a largely remote environment and dealing with personal challenges through the pandemic. Our customer focus has ensured key front-line organisations, namely NHS, Local Authorities and Police Forces, remained fully operational through 2021, providing vital support to the UK population.

2

Maintel Holdings Plc Annual Report & Accounts 2021

Chairman's statement

John Booth, Chairman

In spite of the headwinds of a second year of a pandemic and its impact on our lives, business and the economy, Maintel has grown its revenues on a like-for-like basis (no Doc Sol contribution) by 1% and adjusted EBITDA by 9%, thus delivering on our recovery plan.

Our expanded and strategic range of products and services underpins this progress, the early signs of which can be seen in our cloud seat growth and the acceleration in our transition to a cloud and managed service provider.

Particularly pleasing is our adjusted EBITDA figure of £9.6m (2020: £9.5m), as the last two years' work on cost management and more efficient ways of working is now bearing fruit and will continue to do so. Further investment is planned to streamline our digital business processes and enrich our product suite aligning product delivery with customers' value journey.

Our managed services and technology division saw an overall decline in revenue of 4% to £61m (2020: £64m), with the managed support base reducing 17% to £29m, predominantly due to contract losses already highlighted in 2019 and early 2020 now fully realised, price erosion on renewals, and to on-premise customers transitioning to managed cloud services. Technology division revenues grew by 13% to £20m (2020: £18m) aided by the project delivery of orders closed in FY20, as well as licenses associated with new SD-WAN sales, hardware for cloud deployments and licenses for existing system expansions. This is despite the impact of semiconductor supply constraints which delayed at least £2m of additional revenue into 2022.

The number of contracted seats on our ICON and public cloud platforms increased by 30% to 132,000 with revenue from cloud and software customers now totalling £35.7m, 34% of Group revenue. The Group's cloud portfolio continues to be enhanced by both public and private cloud solutions, and revenue from cloud subscriptions and associated managed services grew 52% to £9.9m. The continued revenue benefit from the additional contracted seats will be realised in 2022 and beyond as these projects continue to be delivered.

Cash generation in the period remained strong and resulted in net debt of £19.4m at year-end, outperforming market expectations, and down from £22.3m at 31 December 2020 and £25.7m at 31 December 2019, evidencing strong cash and cost management. We stopped using UK Government furlough payments in June 2021 (total claimed in 2021 £0.04m (2020: £0.4m)) and will pay deferred VAT of £2.1m by end of March 2022.

During his first two years, with all their challenges, our Chief Executive Officer has led a significant restructuring of the business and the Senior Executive Team. Building on this, he seeks to deepen and strengthen our customer offer and the mechanism of its delivery. Our headcount is 515, down from 600 at 31 December 2020 and the business now benefits from a more efficient cost structure with the correct skill sets in place and a widening portfolio to enable our ambition of annual organic growth.

Challenges remain: the global shortage of semiconductors, predicted higher inflation and ongoing economic and political uncertainty will continue to test us, but we face the future with a reinvigorated team, a strong product offer and lean cost base. The Board is not proposing a dividend at this stage and will review this decision later in 2022.

Following the retirement of Dr Annette Nabavi at mid-year, we are delighted to welcome Carol Thompson to the Maintel Board. Carol brings a wealth of experience and has already assisted the management team in refinancing with HSBC, as well as evaluating the finance team's structure and operational efficiencies as we await the arrival of our new Chief Financial Officer. The search for a new Chief Financial Officer is progressing very positively and we hope to provide a further update in due course.

The Board would like to thank Mark Townsend, who retired as Chief Financial Officer at the end of August. His guidance and leadership over the past five years, during the Azzurri and Intrinsic acquisitions, and more recently in his work sustaining the transformation of Maintel, has been important and we wish him well for the future.

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 often difficult and unusual circumstances this year. We remain confident in the new leadership team's plan to re-engineer the Group for a cloud-first world and in sustaining our return to organic growth.

John Booth Chairman

30 March 2022

3

This is an excerpt of the original content. To continue reading it, access the original document here.