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For Maintel, look past Azzurri deal

The managed IT services and systems specialist's takeover of Azzurri flattered its first-half results
September 20, 2016

Shares in Maintel (MAI) slumped a tenth after the managed IT services and systems group revealed tepid trading in the first half of 2016. Exclude its takeover of peer Azzurri and adjusted cash profits fell by 26 per cent to £2.6m.

IC TIP: Hold at 975p

The group's statutory losses reflect one-off costs related to the Azzurri deal. It may be worth the trouble: the purchase boosted Maintel's scale, expanded its range of services and added a complementary customer base. Azzurri has already inked contracts with a large insurer and a major charity, and management expects to realise £4.6m in annualised cost savings by the end of 2017.

As for Maintel's established operations, sales slid 8 per cent in the managed services and technology division due to delays in signing a trio of multi-year contracts worth over £11m in total. Exclude a one-off equipment sale and revenues fell 2 per cent in the network services arm, as regulatory price cuts and waning landline demand offset higher data sales. And turnover slumped 17 per cent in the mobile segment after management shifted its focus from small businesses to the mid market.

Broker FinnCap expects adjusted pre-tax profits of £10.8m this calendar year, giving EPS of 66p, up from £7.3m and 59.5p in 2015.

  

MAINTEL (MAI)
ORD PRICE:975pMARKET VALUE:£138m
TOUCH:925-1025p12-MONTH HIGH:1,138pLOW: 678p
DIVIDEND YIELD:3.1%PE RATIO:75
NET ASSET VALUE:190p*NET DEBT:100%

Half-yearto 30 JunTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201524.82.116.812.8
201638.1-0.7-8.213.4
% change+54--+5

Ex-div: 29 Sep

Payment: 12 Oct

*Includes intangible assets of £64.4m, or 454p a share