TIDMADT
RNS Number : 8168Z
AdEPT Technology Group PLC
20 September 2022
20 September 2022
ADEPT TECHNOLOGY GROUP PLC
("AdEPT" or the "Group")
AGM Statement
AdEPT (AIM: ADT), one of the UK's leading independent providers
of managed services for IT, cloud-services, unified communications,
connectivity, and voice solutions, provides the following trading
update ahead of its AGM, which is being held later today.
At the meeting, the Chairman, Ian Fishwick, will make the
following statement:
"I am pleased to report that cash generation for the year to
date is in line with management expectations and the Group is
making progress on its strategy to strengthen the balance sheet. In
July 2022, the Group's strong cash flows were used to fund the
final deferred consideration payment for the acquisition of Datrix
Limited, amounting to GBP4.3m, with no further amounts
outstanding.
Sales progress
AdEPT has secured several important new contract wins and
renewals since the start of the new financial year, with law firm
Herbert Smith Freehills, manufacturer CPH2, the Arts University of
Bournemouth and services company Construction Testing Solutions,
amongst others. The solutions deployed by AdEPT for these
organisations demonstrate AdEPT's broad portfolio of products,
which enable its customers to be secure, resilient, agile, and
unified, and provide their employees with a flexible workplace.
This success reflects the strong brand image that AdEPT commands
in its marketplace, the focus on customer engagement, and its
recognised ability to effectively deliver the technologies required
to fulfill the demand for digitisation and cloud centric services
in the UK.
New initiatives
There are two specific initiatives that are expected to have a
positive impact on the Group in the coming months, adding to the
Board's confidence in a strengthening performance in H2.
Firstly, the Group has entered a strategic alliance with Canon
(UK) Ltd, with AdEPT's IT Services being promoted alongside Canon's
capabilities into their UK accounts. This will be taken to market
as 'Canon IT Services, powered by AdEPT' and we anticipate this
will open up significant new opportunities for AdEPT over the
coming months.
The second is the announcement in March 2022 by the then
Education Secretary Nadhim Zahawi of a 'Connect the Classroom'
initiative, supported by a GBP150m fund to facilitate the
introduction of faster and more reliable connectivity for schools.
This presents an additional opportunity for AdEPT to help schools,
a sector in which it has a particularly strong market presence,
with c.4,500 schools as customers.
A significant increase in the dividend
The focus on securing recurring customer contracts continues,
with these currently representing c.74% of total revenue and a
further significant percentage being generated from re-occurring
one-off revenues from existing customers. The strong underlying
recurring revenue and margin stream, combined with continued
operational efficiency, has generated strong organic cash flow.
As a result, the Board is pleased to announce a return to
interim dividend payments, with an interim dividend of 2.50p per
Ordinary Share in respect of the six months ended 30 September
2022. This represents an increase of 150% over the final dividend
of 1p, proposed for the year ended 31 March 2022.
To put our dividend strategy into context: Pre-pandemic, our
dividend policy was to return 30% of our Adjusted Earnings Per
Share to shareholders in dividends. However, as a result of the
significant uncertainty surrounding COVID-19 lockdowns, dividend
payments were suspended.
While the macro-economic landscape remains uncertain, we are on
a journey back to 'normality'. Our reinstatement of interim
dividends reflects this change in circumstance and remains
conservative.
We anticipate returning approximately 20% of our Earnings Per
Share in financial year ending 31 March 2023 ("FY23"), compared to
the pre-pandemic percentage of 30%. This leaves considerable scope
for the Board to execute on its progressive dividend policy over
the coming years.
This dividend will absorb approximately GBP0.6m of shareholders'
funds (September 2021: GBPNil). It is proposed by the Directors
that this dividend will be paid in early April 2023.
Considering this dividend policy and our assumptions on forecast
rises in interest rates, we anticipate the Group's EBITDA: Senior
net debt ratio to be less than 2x within 12 months and is,
therefore, in line with our declared strategy to reduce
leverage.
Trading update
The Group's resilience has been demonstrated under the
challenging macro conditions of the first few months of FY23. It
has grown its project backlog and continues to win new business and
secure contract renewals and extensions. However, the anticipated
growth of the business is being hindered by global chip shortages
for certain types of hardware, which continue to impact the whole
of our sector. Lead-time issues on such products delay the delivery
of client projects, as previously reported, as well as some service
contracts and related recurring support agreements.
In addition, inflationary pressures are expected to increase
product and operational costs in FY23. The Group is working closely
with its partners to mitigate the supply chain delays and to pass
on cost increases, where possible, in particular those linked to
connectivity and telephony charges. This cushions the business, to
some extent, from the inflationary pressures within its supplier
base.
Outlook and Half Year Results
Underlying demand for digitisation and cloud-based services
remains strong, as businesses and government continue to seek
efficiency benefits, and we expect growth in the Group's markets to
return to anticipated levels as the supply chain blockages ease and
the economy returns to more normal trading conditions.
AdEPT's primary focus remains firmly on the three strategic
pillars: delivering strong organic growth, minimizing management
overheads by reducing to two divisions; and reducing gearing.
Strong progress is being made in respect of debt and, with the
Group's strong portfolio of capabilities, the efficiencies driven
by the new One AdEPT platform, and the significant growth
opportunities presented by our markets, positions AdEPT well to
benefit from improving macro market conditions and the
normalisation of the supply chain.
AdEPT intends to announce its half year results for the six
months to 30 September 2022 in mid-November 2022."
Enquiries:
AdEPT Technology Group Plc
Ian Fishwick, Chairman Tel: 07720 555 050
Phil Race, Chief Executive Tel: 07798 575 338
John Swaite, Finance Director Tel: 01892 550 243
Singer Capital Markets (Nominated Adviser
& Broker)
Shaun Dobson / Rachel Hayes / William Tel: 020 7496 3000
Goode
Belvedere Communications
Cat Valentine Tel: 07715 769 078
Keeley Clarke Tel: 07967 816 525
adeptpr@belvederepr.com
About AdEPT:
AdEPT Technology Group plc is one of the UK's leading
independent providers of managed services for IT, unified
communications, connectivity and voice solutions. AdEPT's tailored
services are used by thousands of customers across the UK and are
brought together through the strategic relationships with tier-1
suppliers such as Microsoft, CATO, Extreme, Openreach, BT
Wholesale, Virgin Media, Fortinet, Avaya, Gamma, 8X8, and Dell.
AdEPT is quoted on AIM, operated by the London Stock Exchange
(Ticker: ADT). For further information please visit:
www.adept.co.uk .
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END
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