AdEPT Technology Group revenue of £57.9m at 94% of FY20

AdEPT Technology Group plc (LON:ADT), one of the UK’s leading independent providers of managed services for IT, connectivity, unified communications solutions, and cloud services, has announced its final results for the full year ended 31 March 2021.

The Group delivered a resilient financial performance under highly challenging trading conditions and made considerable progress in its strategic ambitions, despite the disruption.

Financial highlights

· Revenue of £57.9m at 94% of FY20 (2020: £61.7m)

· Gross Profit of £27.6m at 91% of FY20 (2020: £30.2m)

· Underlying EBITDA of £9.8m at 84% of FY20 (2020: £11.7m)1

· Underlying EBITDA margin of 17% (2020: 19%)

· Adjusted fully diluted earnings per share of 22.4p (2020: 28.0p)2

· Cash generation from operating activities after tax £7.4m (2020: £7.6m)

· Cash at year-end £13.2m (2020: £11.8m)

· Conversion of reported EBITDA to operating cash flow before tax of 89% (2019: 82%)

· Year-end net senior debt reduced to £25.6m (2020: £27.9m)3

· Capital expenditure remains at 2% of revenue (2020: 2%)

1 Underlying EBITDA is defined as operating profit after adding back depreciation, amortisation, acquisition fees, restructuring costs, adjustment to deferred consideration and share-based payment charges

2 Profit after tax adding back amortisation, share option charges, the taxation deduction on purchased customer contracts, deferred tax credits on amortisation charges, restructuring and acquisition costs

3 Net senior debt is defined as cash and cash equivalents less short-term and long-term senior bank borrowings and prepaid bank fees

Operational highlights

· Significant progress on Project Fusion, the creation of ONE AdEPT – a single set of financial and operational systems providing the Group with a scalable platform for growth

· Revenue from Public Sector & Healthcare has increased to 55.5% (2020: 44.7%)

· Cloud Centric Strategic Services revenues up 9% year on year to £25.1m (2020: £23.1m)

· Traditional Telephony as a percentage of revenues reduced to 19% (2020: 21%)

· Managed services accounted for 81% of both total revenue and EBITDA (2020: 79%)

· New enlarged £50m banking facility to support investment in growth

Post year-end highlights

· Strategic acquisition of Datrix Limited (“Datrix”), in April 2021, a business focused on enterprise networks and security which enhances the Group’s core capabilities and strengthens its presence in the NHS vertical market – integration on track

· Firm plans for Datrix to transition to the One AEPT platform by September 2021

· Brings new strategic partnerships with Cato Networks, Extreme Networks and Palo Alto which fulfil key customer needs

Current trading and outlook

· Strong momentum from Q4 FY21 has continued into the new financial year

· Sales and margins achievement in line with market expectations in the year to date

· The Board views the future opportunities for the Group with confidence

Phil Race, CEO of AdEPT, said:  “While the pandemic temporarily interrupted the trajectory of our growth, the Board is pleased with the progress achieved under challenging circumstances.  Given our strategic focus on Cloud Centric Strategic Services the organic growth of 9% in this aspect of our business is particularly pleasing. We are confident that the opportunities for the Group remain strong, in a vibrant technology market, with demand for effective ICT services at an all-time high and likely to remain so.

The momentum gained by the Group in Q4 FY21 has continued into Q1 FY22 with sales and margins in the new financial year to date firmly in line with market expectations. Our focus remains on the delivery of strong organic growth, whilst seeking further opportunities to consolidate the fragmented market, through complementary acquisitions which generate strong levels of recurring revenue and margin. Our new integrated operating system, ONE AdEPT, lies at the heart of our plans, providing the Group with a scalable platform for growth.

The business is in great shape and the Board views the prospects for the Group in the year ahead and beyond with confidence.”

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