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

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AdEPT Telecom plc

Full year results & corporate update

for the year ended

31 March 2014

AdEPT Telecom – March 2014 results July 2014

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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

11th consecutive EBITDA increase to £4.04m (2013: £3.73m) 1.7% increase in EBITDA margin to 19.4% (2013: 17.7%)

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 July 2014

£0.3m gross margin increase to 36.4%

Gross margin % increase to 36.4% (2013: 34.5%)

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Financial highlights

Free cash, finance costs and dividends

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£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

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)

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£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

AdEPT Telecom – March 2014 results July 2014

Net debt down £0.3m to £3.0m

Despite acquisition and double tax bill

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Financial highlights

EBITDA growth

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11th 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

500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 Mar 04 Mar 05 Mar 06 Mar 07 Mar 08 Mar 09 Mar 10 Mar 11 Mar 12 Mar 13 Mar 14

999 1,864 2,490 3,280 3,517 3,612 3,624 3,651 3,732 4,043

EBITDA (£'000s)

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AdEPT Telecom – March 2014 results July 2014

Acquisitions: 4 4 4 2 2 1 1

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Financial highlights

Low level of debt

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

2,000 4,000 6,000 8,000 10,000 12,000 14,000 Mar 08 Jun 08 Mar 09 Mar 10 Mar 11 Mar 12 Mar 13 Mar 14

11,295 12,267 10,843 9,214 7,395 5,339 3,270 2,963

Net debt (£'000s)

AdEPT Telecom – March 2014 results July 2014

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AdEPT Telecom plc

AdEPT Telecom strategy update for investors

AdEPT Telecom – March 2014 results July 2014

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Residential competitors

The residential and business markets are very different:

Business competitors

Industry Overview

5-10 700+

c25

700+

Under £2m pa sales Over £20m pa sales

The business market is highly fragmented with few large competitors:

AdEPT Telecom – March 2014 results July 2014

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What makes AdEPT different?

Industry average £250k Top quartile

£444k

AdEPT Telecom

£168k

INDUSTRY LEADING SALES PER EMPLOYEE

• Achieved by system automation
• All based in Tunbridge Wells

AdEPT Telecom – March 2014 results July 2014

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Revenue split

March 2014

AdEPT Telecom – March 2014 results July 2014

Revenue %

Calls Lines Network Solutions CALLS

27% of revenue

LINES

Originally to carry calls Now …

• Broadband
• IP-CCTV
• Alarms
• PDQ machines
• Faxes
• Largest part of

Public Sector

NETWORK SOLUTIONS

• Data connections

and networks

• Inbound

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FOCUS ON DATA NETWORKS

Network Solutions

Increased data connectivity and inbound services

26.9% increase to data connectivity revenue

£3.3m revenue (2013: £2.6m) 15.8% of total revenue (2013: 12.8%)

Data, mobile and inbound services £5.15m pa

24.7% of total revenue (2013: 20.2%)

AdEPT Telecom – March 2014 results July 2014

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Corporate strategy …

£460k

One AdEPT

One Building One Service centre One Billing System One Contact Management System One Management team

Larger “Premier” customers

Small Business customers

Organic

Internal direct and indirect sales channels Larger premier customers Focus on public sector Leveraging frameworks

Acquisition

Small business customers Bolt on customers High margin conversion to EBITDA Part in-fill for small business customer churn

AdEPT Telecom – March 2014 results July 2014

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Customer Service strategy …

50 : 50

Revenue split

Larger “Premier” customers

Small Business customers

PREMIER CUSTOMER SERVICE

Personal account management for large and public sector customers 1,000 customers spending £5,000+ per annum

SMALL BUSINESS CUSTOMER SERVICE

Managed via the call centre 19,000 customers

AdEPT Telecom – March 2014 results July 2014

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FRAMEWORKS awarded ACQUISITIONS completed BLUEBELL TELECOM August - Integrated in 4 weeks BLUE CHERRY TELECOM April - Integrated in 4 weeks

Evolution not revolution

Gradual change is our constant

H1 Sept 2013 H2 March 2014 Post year- end

APPROVALS achieved Approved for data networks New PRODUCTS and suppliers Generic Ethernet Access PSN data product SIP 100Gb Optical

AdEPT Telecom – March 2014 results July 2014

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Some of our COMMERCIAL customers …

Inbound Solutions National Brands Multi-site

400 sites 130 sites 300 sites 350 sites 60 sites

AdEPT Telecom – March 2014 results July 2014

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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 July 2014

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Public sector contract wins

Focus on Local Government

H1 Sept 2013 H2 March 2014 Post year- end

AdEPT Telecom – March 2014 results July 2014

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Savings for recent contract wins

Local Government savings typically 30%

NEATH PORT TALBOT County Council CHESHIRE EAST County Council CARMARTH- ENSHIRE County Council PEMBROKE- SHIRE County Council CANTERBURY City Council CERIDIGION County Council

45.0%

saving

39.3%

saving

36.1%

saving

25.1%

saving

22.2%

saving

42.7%

saving Saved

£176k

Over 3 years Saved

£221k

Over 3 years Saved

£433k

Over 3 years Saved

£215k

Over 3 years Saved

£58k

Over 3 years Saved

£127k

Over 3 years

Example Savings:

AdEPT Telecom – March 2014 results July 2014

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Some of our PUBLIC SECTOR customers …

Local Government Probation Services

AdEPT Telecom – March 2014 results July 2014

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Some of our UNIVERSITY customers …

Universities

AdEPT Telecom – March 2014 results July 2014

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Public sector revenue

Increasing public sector customers

AdEPT Telecom – March 2014 results July 2014

Public sector = Revenue run rate 11.9% at March 2014

(March 2013: 4.5%)

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0%

• 50

100 150 200 250 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 % of total revenue Revenue run rate (£'000s)

Public sector revenue

% of total revenue Revenue run rate

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What do we do …

Supply Chain

Our supply chain – how we work with tier 1 network providers

AdEPT

PSN & non-PSN Data Calls & lines Broadband SIP

One bill

One point of contact

for all service issues

Let us decide who is best to supply the underlying technology

AdEPT Telecom – March 2014 results July 2014

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Dividend Policy

Progressive growth

Progressive future dividend policy

Strong cash generation and reduction to debt should support a progressive policy

100% increase to dividends to 3.0p

Interim 1.5p, final 1.5p (2013: interim 0.75p, final 0.75p )

18% increase to Adjusted Earnings Per Share

Increased to 15.0p (2013: 12.7p )

AdEPT Telecom – March 2014 results July 2014

Dividend cover 5.0x at March 2014

Dividend cover 5.0x (2013: 4.2x on March 2014 DPS )

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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 July 2014

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AdEPT Telecom plc

Contact details

Visit us at: www.adept-telecom.co.uk

Roger Wilson

Chairman

Ian Fishwick

Chief Executive

John Swaite

Finance Director

roger.wilson@adept-telecom.co.uk ian.fishwick@adept-telecom.co.uk john.swaite@adept-telecom.co.uk

AdEPT Telecom – March 2014 results July 2014

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Disclaimer

No representation or warranty, express or implied, is given regarding the accuracy of the information or opinions contained in this document and no liability is accepted by AdEPT Telecom or any of its directors, members, officers, employees, agents or advisers for any such information or opinions. This information is being supplied to you for information purposes only and not for any other purpose. This document and the information contained in it does not constitute or form any part of an offer of, or invitation or inducement to apply for, securities. The distribution of this document in jurisdictions other than the United Kingdom may be restricted by law and persons into whose possession this document comes should inform themselves about, and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of laws of any such other jurisdiction.

AdEPT Telecom – March 2014 results July 2014