Comms provider sees revenue drop 13 percent as result of project delays and loss of legacy contracts
Maintel’s full-year revenue plummeted by 13 percent to £106.4m due to the knock-on effect of the COVID-19 pandemic.
The reduction in turnover for its year ending 31 December 2020 was driven by delays in implementing project work due to the pandemic and a reduced managed services support base following the loss of several legacy contracts in 2019.
Adjusted EBITDA also declined by 20 percent to £9.5m and adjusted profit before tax fell 26.5 percent to £6.2m. The results published this morning caused Maintel’s share price to drop nearly nine percent at the time of publication.
“In common with companies across the globe, 2020 presented a challenge like no other to our customers, our staff and our company,” stated Maintel CEO, Ioan MacRae.
“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”
However, it was not all doom and gloom for Maintel as its transition to a cloud-first company continued at pace.
Its cloud and software revenues increased four percent year-on-year to 26 per cent of total group revenue and it reported strong take-up of its cloud offerings from both the public and private sectors.
Recurring revenue also grew slightly, contributing 73 percent to overall turnover. It also clocked up over 100,000 cloud seats, a key target in its goal to transition to a cloud-first business. Maintel’s cloud forecast is on track to add another 50,000 contracted seats across all platforms, bringing its total to 150,000 seats.
“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,” continued MacRae.
“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”
Maintel has so far had an active first half to its FY21, having recently sold its Managed Print Services Business Unit to Corona Corporate Group for £4.5m and expanding its UK partnership with RingCentral. Earlier this year it was also the subject of a takeover approach from Daisy.
“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,” stated MacRae.
“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.”
In a separate trading update, Maintel announced that CFO Mark Townsend would be departing at the end of the current fiscal year to travel before he goes into “semi-retirement”. A search for his replacement has already begun.
“The board thanks Mark for his guidance and leadership over the past five years, especially during the Azzurri and Intrinsic acquisitions, and more recently for his work sustaining the transformation of Maintel, returning the business back to organic growth,” stated Non-Executive Chairman, John Booth.
“Mark will leave the company towards the end of this year and we look forward to his continued support and guidance over the forthcoming months.”