Northland Capital analyst thoughts on AdEPT Telecom LON:ADT “On the recent acquisition of OurIT Group we raised our FY18 revenue outlook by 16%, and FY18 EBITDA by 12%, forecasting an increase in net debt from £11.5m in FY17 to £17.1m. The Trading Update indicates that underlying performance, and in particular cash conversion, remains strong. Consequently, we have raised our target price from 330p to 360p.”
- In its April 4 Trading Update for the year to 31 March 2017, AdEPT reported that FY17 EBITDA (underlying) rose 26%YoY, indicative of £7.8m, which is 6% above our outlook of £7.3m. Revenue for the year is reported up 16%, indicative of c£34.0m. We note the dilutive effect on projected FY18 EPS of the exercise of warrants by Barclays Bank plc on March 16th, resulting in the issue of 1,204,707 shares and a cash inflow of £129,000.
- The company reports that the Board has recommended a dividend for the year of 7.75p, +19%YoY, which is ahead of our outlook of 7.50p. Year-end net debt is reported at £15.8m, £1.3m below our outlook of £17.1m. AdEPT reports that it “continues to generate consistently strong free cash flow”. Net debt is inclusive of: £9.7m in aggregate initial consideration for the acquisitions of Comms Group UK Ltd., CAT Communications Ltd., and OurIT Department Ltd.; £3.0m in deferred consideration for the acquisition of Centrix Ltd.; and the £0.4m increase in dividends paid.