AdEPT Telecom plc Full year results & corporate update for the - PowerPoint PPT Presentation

AdEPT Telecom plc Full year results & corporate update for the year ended 31 March 2014 AdEPT Telecom – March 2014 results Page 1 Page 1 July 2014

Financial highlights Trading results and earnings (0.8%) revenue reduction to £20.9m (2013:£21m) Reduced call volumes and prices 8.4% increase in EBITDA to £4.04m 11 th consecutive EBITDA increase to £4.04m (2013: £3.73m) 1.7% increase in EBITDA margin to 19.4% (2013: 17.7%) £0.3m gross margin increase to 36.4% Gross margin % increase to 36.4% (2013: 34.5%) 13% increase to PBT PBT increased by £0.2m to £1.8m (2013: £1.6m) 35% increase to PAT PAT increased by £0.3m to £1.3m (2013: £1.0m) 18% increase to Adjusted Earnings Per Share Increased to 14.99p (2013: 12.70p ) AdEPT Telecom – March 2014 results Page 2 Page 2 July 2014

Financial highlights Free cash, finance costs and dividends £2.6m Free cash flow After interest free cash flow £2.6m (2013: £3.0m) Double corporation tax impact £0.5m – adjusted free cash flow £3.1m Net debt down £0.3m to £3.0m Despite acquisition and double tax bill 30% reduction in finance costs Finance costs reduced to £0.26m (2013: £0.37m) 100% increase to dividends to 3.0p Interim 1.50p, final 1.50p (2013: 1.50p) £2.2m spent on acquisition consideration Bluebell Telecom acquisition completed and fully integrated in August 2013 Post year end acquisition of Bluecherry Telecom Bluecherry Telecom acquisition completed and fully integrated in April 2014 3 AdEPT Telecom – March 2014 results Page 3 Page 3 Page 3 July 2014

Financial highlights EBITDA growth EBITDA (£'000s) 4,500 4,000 4,043 3,500 3,732 3,651 3,624 3,612 3,517 3,280 3,000 2,500 2,490 2,000 1,864 1,500 1,000 999 500 0 Mar 04 Mar 05 Mar 06 Mar 07 Mar 08 Mar 09 Mar 10 Mar 11 Mar 12 Mar 13 Mar 14 Acquisitions: 4 4 4 2 2 1 1 11 th consecutive year of EBITDA growth EBITDA increased to £4.04m (2013: £3.73m) Our business model based on recurring revenue and low capex has been very resilient throughout the recession 4 AdEPT Telecom – March 2014 results Page 4 Page 4 Page 4 July 2014

Financial highlights Low level of debt Net debt (£'000s) 0 2,963 3,270 2,000 5,339 4,000 7,395 6,000 9,214 8,000 10,843 11,295 12,267 10,000 12,000 14,000 Mar 08 Jun 08 Mar 09 Mar 10 Mar 11 Mar 12 Mar 13 Mar 14 Net debt : EBITDA ratio 0.73x £0.3m net debt reduction Net debt reduced to £3.0m (2013: £3.3m) After £2.2m acquisition consideration payments Cash interest cover 8.6x Operating cash flow : Cash interest paid AdEPT Telecom – March 2014 results Page 5 July 2014

AdEPT Telecom plc AdEPT Telecom strategy update for investors AdEPT Telecom – March 2014 results Page 6 Page 6 July 2014

Industry Overview The residential and business markets are very different: Business Residential 700 + 5-10 competitors competitors The business market is highly fragmented with few large competitors: c25 700 + Over £20m pa sales Under £2m pa sales AdEPT Telecom – March 2014 results Page 7 Page 7 July 2014

What makes AdEPT different? INDUSTRY LEADING SALES PER EMPLOYEE Achieved by system automation • All based in Tunbridge Wells • AdEPT Telecom Top quartile Industry average £ 444 k £ 250 k £ 168 k AdEPT Telecom – March 2014 results Page 8 Page 8 July 2014

Revenue split March 2014 CALLS Revenue % 27% of revenue LINES Originally to carry calls Now … Broadband • IP-CCTV • Alarms • Calls PDQ machines • Lines Faxes • Largest part of • Network Solutions Public Sector NETWORK SOLUTIONS Data connections • and networks Inbound • AdEPT Telecom – March 2014 results Page 9 Page 9 July 2014

Network Solutions Increased data connectivity and inbound services FOCUS ON DATA NETWORKS Data, mobile and inbound services £5.15m pa 24.7% of total revenue (2013: 20.2%) 26.9% increase to data connectivity revenue £3.3m revenue (2013: £2.6m) 15.8% of total revenue (2013: 12.8%) AdEPT Telecom – March 2014 results Page 10 Page 10 July 2014

Corporate strategy … Larger “Premier” customers Small Business customers £ 460 k Organic One AdEPT Acquisition Internal direct and indirect One Building Small business customers sales channels One Service centre Bolt on customers Larger premier customers One Billing System High margin conversion to EBITDA Focus on public sector One Contact Management System Part in-fill for small business Leveraging frameworks One Management team customer churn AdEPT Telecom – March 2014 results Page 11 Page 11 July 2014

Customer Service strategy … Larger “Premier” customers Small Business customers PREMIER CUSTOMER 50 : 50 SMALL BUSINESS SERVICE CUSTOMER SERVICE Personal account management for Revenue split Managed via the call centre large and public sector customers 19,000 customers 1,000 customers spending £5,000+ per annum AdEPT Telecom – March 2014 results Page 12 Page 12 July 2014

Evolution not revolution Gradual change is our constant ACQUISITIONS APPROVALS FRAMEWORKS New PRODUCTS completed achieved awarded and suppliers BLUEBELL Generic Ethernet H1 TELECOM Access Sept August - 2013 Integrated in 4 weeks PSN data product H2 March 2014 SIP BLUE CHERRY Post TELECOM year- April - Integrated 100Gb Optical Approved for in 4 weeks end data networks AdEPT Telecom – March 2014 results Page 13 Page 13 July 2014

Some of our COMMERCIAL customers … National Brands Multi-site Inbound Solutions 400 sites 130 sites 300 sites 350 sites 60 sites AdEPT Telecom – March 2014 results Page 14 Page 14 July 2014

Hold 3 Government Frameworks Growing Public Sector revenues ESPO Telecom Framework – Sole recommended supplier of calls, lines, broadband, fibre broadband and SIP to Public Sector and registered charities nationwide CCS Telephony Framework – One of 10 companies recommended on the Crown Commercial Service RM1035 telephony services framework JANET Framework – One of a small number of companies approved to sell data connectivity to UK Colleges and Universities – Renewed for 4 years in July 2014 AdEPT Telecom – March 2014 results Page 15 Page 15 July 2014

Public sector contract wins Focus on Local Government H1 Sept 2013 H2 March 2014 Post year- end AdEPT Telecom – March 2014 results Page 16 Page 16 July 2014

Savings for recent contract wins Local Government savings typically 30% Example Savings: NEATH PORT CHESHIRE CARMARTH- PEMBROKE- CANTERBURY CERIDIGION TALBOT County EAST ENSHIRE SHIRE City County Council Council County Council County Council County Council Council 45.0% 39.3% 36.1% 25.1% 22.2% 42.7% saving saving saving saving saving saving Saved Saved Saved Saved Saved Saved £176k £221k £433k £215k £58k £127k Over 3 years Over 3 years Over 3 years Over 3 years Over 3 years Over 3 years AdEPT Telecom – March 2014 results Page 17 Page 17 July 2014

Some of our PUBLIC SECTOR customers … Probation Local Services Government AdEPT Telecom – March 2014 results Page 18 Page 18 July 2014

Some of our UNIVERSITY customers … Universities AdEPT Telecom – March 2014 results Page 19 Page 19 July 2014

Public sector revenue Increasing public sector customers Public sector revenue 250 14.0% 12.0% 200 Revenue run rate (£'000s) 10.0% % of total revenue 150 8.0% 6.0% 100 4.0% 50 2.0% - 0.0% Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 % of total revenue Revenue run rate Public sector = Revenue run rate 11.9% at March 2014 (March 2013: 4.5%) AdEPT Telecom – March 2014 results Page 20 Page 20 July 2014

What do we do … Supply Chain Our supply chain – how we work with tier 1 network providers One bill PSN & non-PSN Data One point of contact Calls & lines for all service issues AdEPT Broadband Let us decide who is best to supply the underlying SIP technology AdEPT Telecom – March 2014 results Page 21 Page 21 July 2014

Dividend Policy Progressive growth 18% increase to Adjusted Earnings Per Share Increased to 15.0p (2013: 12.7p ) 100% increase to dividends to 3.0p Interim 1.5p, final 1.5p (2013: interim 0.75p, final 0.75p ) Dividend cover 5.0x at March 2014 Dividend cover 5.0x (2013: 4.2x on March 2014 DPS ) Progressive future dividend policy Strong cash generation and reduction to debt should support a progressive policy AdEPT Telecom – March 2014 results Page 22 Page 22 July 2014

AdEPT Telecom plc Share ownership Chris Fishwick companies* 29.2% Individual Greenwood Investments 15.2% Family office Fiske Private Clients 10.0% Private clients Ian Fishwick* 6.7% Individual Allan Gauld 3.9% Individual Octopus 3.9% VCT Roger Wilson* 3.6% Individual Hargreave Hale 3.2% Institution Pat Wilson 3.1% Individual SUB-TOTAL 78.8% • Shareholder and management interests aligned • Over 40% of AdEPT is owned by the Directors* AdEPT Telecom – March 2014 results Page 23 July 2014

AdEPT Telecom plc Contact details Roger Wilson Ian Fishwick John Swaite Chairman Chief Executive Finance Director roger.wilson@adept-telecom.co.uk ian.fishwick@adept-telecom.co.uk john.swaite@adept-telecom.co.uk Visit us at: www.adept-telecom.co.uk AdEPT Telecom – March 2014 results Page 24 Page 24 July 2014