Especially as another meaty dividend hike accompanied interim profits that jumped by 36% in the period to September 2017.
New additions OurIT (six months) and Atomwide (two months) helped revenues match earnings with a 36% rise to £22.6mln.
Profit before tax increased to £2.1mln (2016: £1.5mln) while cash generated went up by 20% to £3.8mln. The dividend rose by 13% to 4.25p.
AdEPT has traditionally won substantial amounts of public sector contracts and 39% of revenue now comes from this source following the acquisition of schools/college supplier Atomwide.
Customers include 100 Councils, 15 NHS Trusts, more than 30 private hospitals, 15 universities, over 3,000 schools and some central government departments.
That has been a theme of the recent acquisition targets: widening the customer base and taking out duplicated costs.
Managed services revenues, where it handles the customer’s whole telecoms caboodle, are another fast growing area.
Revenue here rose to 68% of the total from 53%, at £15.3mln during the latest half year.
Broker Northland said that through acquisition AdEPT has successfully developed its presence in the provision of managed services to small businesses and the public sector, focused on London and the South East.
Acquisitions the key
Since 2015 AdEPT has made four major purchases: Centrix in Fleet a specialist in Avaya Aura networks and bolstered by the acquisition of CAT in November of last year.
Comms Group, an Avaya IP Office specialist for smaller customers, waa acquired in 2016. The 12 month performance-based earn-out period ended on 31 May and Comms achieved the maximum earn-out payment of £3.5 mln was paid in July 2017.
OurIT Department was acquired in February 2017 was AdEPT’s first IT business. OurIT is based and focused on London and South East customers. A contingent deferred consideration of up to £3.75mlm will be payable in April 2018 in cash, with current estimates suggesting the payment will be towards the top end.
Atomwide, August 2017, is an IT supplier more than 3,000 schools and over 2 million users.
“We now have over one million Office 365 users; this is one of the largest single Office 365 deployments in the world,” AdEPT said at the time. The deferred consideration is up to £8mln payable in cash.
Broker upbeat for full year
Northland expects full year 2018 turnover to rise to £44.4mln, with adjusted pre-tax profits to £8.3mln.
AdEPT currently trades at a both on an earnings and underlying profits basis rating added the broker, which has a target price of 400p compared to a market price of 282p.