Northland Capital partners view on AdEPT Telecom LON:ADT: In our view this development – the combination of acquisition and expanded debt facility – signals a ‘step change’ in AdEPT’s strategy, in both depth of services provision and scale of near- and medium-term operations. AdEPT has long-signalled that the provision of unified telecom services requires a level of IT expertise which matches the requirements of organisations embracing the products and services offered by expert systems, cloud-based and other enhancements. The acquisition of OurIT Group makes AdEPT’s – already established – appreciation of this trend a reality, and increases the scope of its unified offering. The expanded debt facility shows that AdEPT has both the aspiration and now the ability to further its strategy, and at a potentially more ambitious scale. In light of the acquisition our forecasts are under review.
|n AdEPT Telecom announces that it has signed a £30m, 5-year revolving credit facility with Barclays Bank and The Royal Bank of Scotland – on an equal basis – to fund strategic acquisitions and to leverage benefits from increased scale and an expanded product set. Successful implementation of its acquisition strategy means that AdEPT has outgrown the scope of its previous Barclays £15m revolving credit facility; the new arrangement provides the increased scale and flexibility required to fulfil the next stages of its strategy.
n AdEPT announces that it has signed an agreement with effect from 1 February 2017 to acquire the entire issued share capital of OurIT Group, comprising OurIT Department Ltd., and its trading subsidiary Brightvisions Ltd., an established U.K.-based specialist provider of IT Services. The acquisition is for an initial consideration of £4.75m – minus net debt plus working capital as at 31 January 2017 – payable in cash. A further consideration of up to £3.75m – minus net debt plus working capital – is payable in cash, dependent upon the trading performance of OurIT Group post-acquisition. The total consideration will be funded out of the new bank facility, and leave headroom for further acquisitive growth.
n The acquisition is expected to be earnings enhancing from completion, adding approximately 15% to AdEPT group revenue run rate. OurIT Group has an ‘asset-light’ approach, brings a geographically (London and the South East) well-matched and established medium- to large-scale enterprise customer base, and has a highly-complementary telecommunications and IT product set. Post-acquisition OurIT’s senior management team will remain in place.
n OurIT Group offers its clients the delivery of outsourced IT services and managed service solutions. AdEPT notes that the convergence of telecommunications and IT is an increasing requirement for both its existing and its targeted enterprise and public sector customer base. Consequently, the addition of OurIT’s skillset will enhance AdEPT’s managed services offering, incorporating unified communications and IT.
n Founded in 1993, OurIT is a highly-accredited IT services provider with over 20 years’ experience, offering award winning 24-hour IT support services and technology solutions, focused on London and the South East. It is a certified Microsoft Gold Partner and Business Specialist, Apple Specialist, Cisco Certified Partner and Dell Preferred Partner. OurIT will continue to be based in London (Chingford and Bevis Marks), as will Brightvisions continue to be based in St Neots, near Cambridge.
n OurIT Ltd., and Brightvisions Ltd., Reported earnings. For year ended 31 December 2015 OurIT Ltd., reported revenue, operating profit and profit before tax, respectively, of £3.71m, £0.286m and £0.259m respectively. Capital expenditure in the year ended 31 December 2015 was not significant. Net and gross assets were £0.49m and £1.07m respectively. For the same year Brightvisions reported revenue, operating profit and profit before tax of £1.46m, £0.165m and £0.167m respectively, with insignificant cap-ex. Respective net and gross assets were £0.32m and £0.53m.