On 5th April 2018, AdEPT Telecom Plc (LON:ADT) issued a Trading Update for the year to March 31st 2018 in which it highlighted improved earnings, reduced net debt and an increase in the proposed dividend. Northland Capital Partners Analyst Mike Jeremy comments:
AdEPT noted that it expects revenue to be ahead of the 29% YoY growth we estimated, whilst EBITDA (adj.) is expected to be “slightly ahead” of our estimated £9.6m (+23% YoY).
The Company reported net senior debt of £18.05m, which is below our estimate of £22.0m. As AdEPT noted, £3.65m of this arises from timing of payment of the deferred consideration relating to the acquisition of Our IT Department Ltd., which is due after year-end, combined with stronger EBITDA. The company noted that it “continues to generate consistently strong free cash flow conversion from EBITDA with a capital asset light model”.
The proposed final dividend is 4.50p per share, to be paid in October, taking the total dividend to 8.75p, +13% YoY, compared to our estimate of 8.00p. The interim dividend of 4.25p was paid on 7th April.
We have adjusted our FY18 dividend in line with the company outlook, and, in light of this positive update with key metrics ahead of our estimates, particularly cash flow, we have raised our FY19 dividend estimate from 8.5p to 9.5p.
AdEPT Telecom Plc is an independent unified communications and IT services provider to the B2B market and public sector. AdEPT operates an efficient, award winning, services platform and has some of the highest operating margins in the sector. The Company active in acquisitions and has an experienced integration team. It has particular strength in providing dedicated service management for multi-site businesses and public sector organisations.