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AdEPT Technology Group PLC

AdEPT Technology focused on developing organic sales growth

The year-end net senior debt deepened to £27.1mln from £17.6mln a year earlier after the earnings enhancing acquisitions of Shift F7 and ETS Communications

Data centre
The AdEPT Nebula service is up and running

Acquisitive telecoms and information technology services provider AdEPT Technology Group PLC (LON:ADT) has made a steady start to the new financial year.

The company said the focus this year will be on developing organic sales by exploiting its approved supplier status on the various public sector frameworks, encouraging further cross-company collaboration and maintaining profitability and cash flow conversion.

READ AdEPT ticks up on plans to hike dividend in full year

In the year to the end of March 2019, the group’s revenue rose 11% to £51.3mln from £46.4mln the year before.

The group, which started life as a fixed line telecoms provider, continues to switch its focus towards managed service and information technology (IT) revenues, and revenue from managed services now represents around 75.0% of the group’s total, up from 69.8% in the previous financial year.

Managed services product revenues increased to £38.5mln from £32.4mln the year before while traditional fixed line revenues declined to £12.8mln from £14.0mln the previous year.

The proportion of AdEPT revenue being generated from recurring products and services increased to 78.6% of total revenue, up from 78.4% in the year to the end of March 2018.

Underlying earnings (EBITDA) also rose by 11%, to £10.8mln from £9.8mn the previous year. The EBITDA margin held steady at 21.0% while the gross margin improved to 49.4% from 47.7%.

As previously flagged, the full-year dividend pay-out was hiked 12% to 9.8p from 8.75p. The board is confident that continued focus on underlying profitability and cash generation will support a progressive dividend policy; the intention is to distribute roughly one-third of free cash flow as dividends and keep earnings cover (earnings per share divided by dividends per share) above two.

“The group continues to operate a capital-light asset model, with only 1% of revenue strategically invested in the capital development of the AdEPT Nebula proposition during the year, which has extended the AdEPT Nebula product portfolio to incorporate IP [internet protocol] cloud telephony services, hosted IT services and a range of data connectivity services,” said Ian Fishwick, the chairman of AdEPT.

AdEPT Nebula is the group’s multi-protocol label switching network and hosting capability built upon three data centres. It is already live and is providing Avaya IP cloud telephony services, hosted IT services and a range of data connectivity services.

“Free cash flow generated combined with the extension of the debt facility during the year was used by the company to complete the earnings enhancing acquisitions of Shift F7 Group Limited and ETS Communications Limited,” he added.

Quick facts: AdEPT Technology Group PLC

Price: 346 GBX

Market: LSE
Market Cap: £82.01 m
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