AdEPT reports 'resilient performance' in final quarter

Managed IT services provider AdEPT reported a “resilient performance” in its fourth quarter on Wednesday, despite the ongoing challenges of the pandemic.

The AIM-traded firm said sustained customer demand avoided any need for the furlough scheme in the three month period ended 31 March, which had been used in the first and second quarters.

It said it was expecting to close the 2021 financial year in line with current market forecasts for revenue and EBITDA, set in February, following the reintroduction of its financial guidance.

The group said it continued to have “strong” cash flow generation in the final quarter, with senior net debt as at 31 March in line with market expectations at £26.1m.

That included the repayment of the deferred first quarter VAT liability early in the fourth quarter, and the cash costs of its new bank facility arrangement fees.

AdEPT said its strategy was to grow both organically and by acquisition, to consolidate a fragmented market by leveraging its banking facilities, which were supported by a strong balance sheet and high cash generation.

The board said that as part of that strategy, the company had signed a new, enlarged banking facility agreement with NatWest and the Bank of Ireland, to support its growth ambitions with a declared intention to acquire “one or two” complementary, earnings-enhancing companies each year.

It said the agreement was for three years, extendable by one year, and provided the company with up to £70m senior debt, comprising a £35m revolving credit facility, a £15m term loan, and a £20m accordion facility.

The new facility replaced the £40m revolving credit facility, which was due to expire in February 2022, and was on the same commercial terms as the facility it replaced.

Finally, and in line with market expectations, the board confirmed that no final dividend would be proposed for the 2021 financial year.

It said it would update the market on the company's dividend policy in the announcement of its interim results for the six months ending 30 September.

“The major story of the last 12 months has been the dramatic acceleration in home working and the resultant impact on the ability of our customers' workforce to securely access their technology infrastructure remotely,” said chairman Ian Fishwick.

“Change brings transformation in thinking and behaviour and, in the 2021 financial year, AdEPT has proven its ability to deliver transformational solutions and support its customers, enabling them to adapt and perform under exceptional circumstances.

“Given the critical nature of IT and communications, AdEPT employees were classified as key workers early in the pandemic.”

Fishwick said that enabled the company to continue servicing customers throughout the crisis.

“With over 50% of the UK adult population now vaccinated and the government implementing its roadmap out of lockdown, we feel more optimistic about the future of the UK economy and what this means for our business.

“We believe that the pandemic has served to reinforce the importance of our core competences and that there is increasing demand for the solutions we provide.”

The new financial year was presenting new growth opportunities for the group, Fishwick said, both organic and via acquisition, as the company looked to capitalise on the opportunities of a growing market, accelerated by changes brought about by the pandemic.

“With ‘One AdEPT’ now 80% complete, we also have the infrastructure to build further scale.”

At 0806 BST, shares in AdEPT Technology Group were up 1.6% at 254p.